Parts of the oneg to be modified were cut out and sent to ILM for digital scanning; unless GL took a magnet to every hard drive at ILM, they still exist. Parts that had irrevocably faded were replaced with new elements struck from one the three color separations made years ago. The whole thing was assembled into a new negative for use in printing IPs. So, in 1997 we have ...

a) Effectively the complete original negative, with the caveat that some parts were Technicolor three strip inserts and some parts only exist in digital form, and

b) the Technicolor masters themselves. (Reports vary on the quality of these, but the consensus seems to be that they're a stable, perfect copy of a less than perfect negative.)

Evidently, using the Technicolor elements is almost a "lost art," and the expense was greater than hiring people to physically clean the extant negatives. If it really is cost prohibitive to make a new negative from the Technicolor elements, then Lucas really was careless IF he chopped up his only Star Wars negative in the nineties. Or at least, one can say he is not risk averse; if something calamitous were to happen to his negative during the SE process, he'd have to go back to the more expensive Technicolor process instead of falling back on his prepared second negative.

In any case, the fact remains that a 1993 video was not the "starting point" for the Special Editions. The starting point was a 1994 film restoration project.