Ridiculous, quite right, but apparently that's what happened. The original negative is the highest quality source for the movie, coming straight from the camera, so that's what Lucas wanted to use for his so called restoration. Instead of making a copy of the o-neg first and cutting all the alterations into it, he just cut them straight into the o-neg.
I've heard people say time and again on these boards that if they were in control of the situation they'd take the altered '97 negative and basically de-alter it. The rationale seems to be that the o-neg will always be the highest quality source, so we shouldn't even consider using another source like an IP or a print. Honestly, it makes no difference to me if an IP were to be used for our long-sought-after remastered OOT. I mean, the prints that you go to see in movie theaters are several generations removed from their o-negs, and a print is basically the highest quality you can actually watch a movie in, short of digital projection of course.