Re: your last point I remember seeing Jurassic Park at an IMAX back in the 90s and it looked terrible because they were taking a regular print that was definitely not meant to be blown up that big and doing so.
That shouldn’t happen during the original run, sounds like they somehow ended up with a multiplex print.
Problem has always been the cost-cutting bean counting tight-ass distributors. If they can save a buck surrendering QC on multiplex theatrical prints they do. The optical enlargement uses Japanese made printing nikkors optics (look them up, and how much they cost - used let alone how much they were brand new back in the 70’s), so you can absolutely go to 65mm/70mm or as is the case with Terminator II Super35 to Scope while the film stays razor-sharp, it’s just a matter of how the final prints are made and the budget. The HQ 35mm ones are called show prints and are designed for special shows or theatres with very large screens.
You’re absolutely right though about the large screens. An average print can look better in a smaller auditorium, but it the places that don’t do any masking will ruin the experience with window-boxing or letter-boxing on the screen and sadly most multiplexes are like that now. They must not understand how it ruins the experience!