Yes, the negative was deteriorating, and much of it had to be replaced with dupes from other sources, or reprinted. Digital technology hadn't yet advanced far enough, the 1997 SE was mostly an old-fashioned photo-chemical restoration. The entire film wasn't digitized because there was no such thing as DI's back then, they just recomposited whatever shots they need, printed them back onto film and then spliced them into the neg so that it could be completed photochemically.

As for EOD, most of thats just laserdisk footage anamorphically enhanced. It was done out of house by some company, and the entire feature is anamorphic so that means they were forced to re-render the letterbox footage as anamorphic in order to include it in the feature, otherwise it would look ridiculous to have this tiny box in the center of the screen whenever they showed clips.