This is from the USA Today article, around the time the 2004 Boxset was about to be released:
"The high-definition video transfers of the first three Star Wars films (Episodes IV-VI: A New Hope, The Empire Strikes Back and Return of the Jedi) that Lucasfilm delivered to Lowry, he says, "were a little rougher than we expected coming in the door. I thought, 'Oh, man.' "
It would seem that Lowry never got their hands on the actual prints, but high-def video masters straight from Lucasfilm, which were probably from either the Theatrical Versions or the Special Editions of '97. I'm guessing, and someone correct me if I'm wrong, that Lowry had high-def masters of the '97 Special Editions.
Now, if that's true, how come they were also in such bad shape?