I think you're on the right track, zombie84. I don't think Fox would distribute the product at this stage of the game if it was simply going to be a port of an LD transfer. Fox's record is not exactly stellar, but they have tried to improve their product at most opportunities.
At absolute worst, I think the difference will be comparable to the difference between the early 90s restoration of Snow White and the Seven Dwarfs and the 2001 DVD; not perfect, but a vast improvement over what was previously available. What I really hope is that the grayscale is maintained a la what Mike Verta was trying to do with his Star Wars Legacy project, among the other corrections he was making. The 2004 DVDs have very crunched blacks.