The D1 masters were scanned NON-ANAMORPHIC at laserdisc resolution only (so something like 300 lines of picture), and then stored digitally.
A scan of half-decent 35mm print, whether manual or automated, can be done at a very high resolution - better than 1080P for instance. I seem to recall that digital film projection is around 2000 lines, and that 35mm film actually has better resolution than that.
So - if we are conservative and say 1000 lines - how is that not better than 300 lines?