Yeah, the IP's were not in the best condition because they were themselves fading, and of course they have their own damage from use, as well as dupe grain and dirt. But some pieces of the O-neg were worse--some were damaged, and none of the CRI shots were useable. So a scan of the IP that is color-corrected is the best alternative. However, keep this in mind: whenever ILM did an IP scan it was only for the sections they were working on, in other words only for the enhanced scenes. Secondly, its not known if the IP was used to make a new O-neg for non-SE parts--ILM: Into the Digital Real says the IP "was used to restore" the film, but the only specifity they get into is when they say ILM sometimes used scans of the IP. Ted Gagliano says they were using the separation masters to make new O-neg pieces, so if they are doing this then there's no reason why they would have to use the IP. Hence, I believe that the IP was only used by ILM.
What's interesting is what I didn't include there, and maybe should, is that ILM used the IP's for pretty much all their work in ESB and ROTJ. It seems that in those films they didn't re-composite as much--the whole AT-AT sequence was re-comped, and part or all of the asteroid chase as well, but I think otherwise it was much less severe. This may have been because of the timeline (they were only decided as being restored in late 1995--originally it was SW-only), because their negatives were better, and because the composites were better themselves. However, when ILM was doing the Jabba sequence in SW they couldn't find the original negatives--the sequence had been copied to 16mm for the SW to Jedi documentary of 1983, and then lost. But they did find the IP of the sequence (I don't know what this means--a dupe print, or an IP from a rough cut?). ILM realised that they could deal with the extra grain digitally (which I guess means some kind of softening filter, or a primitive version of Lowry's technology), and it was so successful that they used the IPs for all their enhanced shots in ESB and ROTJ.
Probably because this was easier/cheaper than using the original elements and re-compositing them, as was done on many of the SW shots.