That’s a slick attempt! I agree that the music at the end of the scene should continue to cover the intro to Palpatine’s office, or the music should be deleted in that transition completely.

Also, this isn’t a critique with your work but with the scene itself, but the sparring scene feels weird and has since the beginning. The biggest problem for me is the strange cut near the end when Obi-wan leaps into action again. It feels like there’s a missing shot, and I assume this was a cut point in the original scene but there’s definitely a loss of continuity here. The lines ‘Your weapon’s gone…it’s over.’ followed by ‘Your need for victory, Anakin, it blinds you’ feel superfluous to the flow before and after. Obi-wan’s next line ‘You’re a great warrior, Anakin…’ feels like the proper end to the action, and it may be best to just delete the second false ending altogether. I’d suggest cutting from Obi-wan being disarmed straight to the wideshot of Obi-wan spinning out of his crouch to put an end to the fight.

As to my thoughts on overall placement of the scene, I’m still unconvinced that it wouldn’t work better after Palpatine’s office. That just seems like the most natural place in terms of the exposition and flow of Star Wars movies, and I’m not too bothered by the differences in character appearance. Any AOTC edit which uses upscaled deleted scenes is going to be at least a little suboptimal, visually speaking.

My ideal placement is still Senate - Palpatine’s Office - Sparring - Padme’s Apartment (sans elevator).