The SE LD as a source would be far better. They are cleaned up, but are still near the same level as the O-OT LDs. In addition to this, you have the uncompressed video to ceate a master AVI from, rather than the MPEGs of the DVDs.
"it's a lot easier to make a sharp transfer look bad"
Which begs the question...why bother with such a sharp transfer in the first place. It's like getting a Porsche, but driving it in second gear so you don't go too fast. Know what I mean?