The Star Wars restoration process began with a 10-bit RGB high-definition scan of the original negatives. This data was then used by a team at Lucasfilm and Industrial Light & Magic to work with George Lucas to do some significant color correction to the movies. This color-timed data was then transferred to Lowry Digital hard drives, to begin the massive clean-up effort.
It wasn't the original original negatives though. It was new negatives and masters created as part of the SE 97 restoration. As documentation around the time confirms the original negatives were in terrible shape and used for restoration effort, after which, new "original" negatives were made. This is more than guessing, Lowry confirms in the article that the negative suffered as a result of "conventional restoration processes." (which would have been the 97 restoration)
"There are three key contributing factors to the degradation of film," Lowry explains. "Dirt, time and chemical damage due to conventional restoration processes."
It wasn't the original original negatives though. It was new negatives and masters created as part of the SE 97 restoration. As documentation around the time confirms the original negatives were in terrible shape and used for restoration effort, after which, new "original" negatives were made. This is more than guessing, Lowry confirms in the article that the negative suffered as a result of "conventional restoration processes." (which would have been the 97 restoration)
"There are three key contributing factors to the degradation of film," Lowry explains. "Dirt, time and chemical damage due to conventional restoration processes."
Also, Lucas does have several Technicolour prints in perfect condition in storage. Articles surrounding the 97 restoration confirmed this - as they were used for the color-timing of the 1997 edition. A reasonable Google search should turn up some good sources. Those sources also confirm the production of new O-negs and 35 pristine prints from the 97 process. All of which was color-timed using the Technicolour prints (the best process to date for capturing color in film) as a source.
Of course, my favorite part of the article is the "significant color correction" that LFL did to the scanned-in HD copy of the already perfectly color-timed films. More like significant "candy correction" as they jacked up all the saturation, contrast and color temps to make the damn things look like the Prequels. Herein lies why the 04 release sucks so bad - green lightsabers, blindingly blue R2, red red red, orange bleeds, all kinds of stuff. Of course, when the geeks at LFL shipped it to Lowry; it probably looked "OK"; little did they realize that the Lowry algorithms would eat that crap up and magnify the problem into the monster we see today.
An OOT possible? Just do a 10-bit RGB HD scan of one of Lucas's technicolour prints in the basement and call it a day.
Really, there's no excuse for a shoddy release. Other than, Lucas doesn't want anything looking better than his latest Frankenstein.