Happy to see this posted I’m always trying to find this particular clip! Shows how aware and forward thinking Lucas always was with technology. Seems like a direct reaction to making the special editions too, he had so much fun and saw how he could modify an existing piece like never before and knew the fans would be all over modding to their own taste too.
And yes he was absolutely okay with it, I even remember Lucasfilm allowing fans to download a library of sound effects, that’s his thing he’s very pro creatives. He even wanted to see The Phantom Edit until it became about fixing his mistakes and turned into a prequel bash.
George was heavily involved not only with revolutionizing CGI and HD digital cinema cameras, but also digital editing software with the creation of EditDroid.
Also advised on Final Cut and a few others, I’m not sure if it’s confirmed anywhere but he may have consulted on some Adobe too like Photoshop.