Mrebo wrote: Why in the world did Lucas use that CGI Jabba?

Because they wanted Jabba to move. And CGI Jabba cost a lot less. and the computer model could be recycled for future projects, it was also a 'could it be done' kind of pushing the envelope test. They weren't satisfied with the 1997 SE results as the 2004 set shows. and 2011 might bring another one.

On the successful CGI side, Watto and Sebulba for me show how hand animated computer characters can be pulled off and be a part of the creation of a believable synthetic character creation. Gollum's use of on set animation techniques added a lot to the believability. Jar-Jar and Yoda might have been improved using this technique. But the technology wasn't their until Avatar to have it as part of the on set integration.