They were shot on film, but transferred to video for VHS and DVD. A lot of the stock footage sources however, were originally on video.
Did the blu-ray of the first film go back to the film elements? You could probably get better results for the filmed segments color correcting and overlaying it on top of the upscaled DVD.
That would be tricky. The dvd is fullscreen, but the blu-ray is widescreen. There would be a huge quality difference on the top and bottom of the image.