My domestic situation is making it difficult to watch this all in one go as I would prefer but I'm up to the point where Luke is back at Ben's place so I can report up until then.
First of all the picture isn't looking so good (possibly because it's an NTSC image).
It's very contrasty and the resolution has dropped out a great deal.
The selective application of a sepia tint to the PT footage is more jarring than artistic and the transitions between the the past and the present are not stylistically consistent with the transitions already present within the footage which creates a jarring effect.
Sound is also an issue.
The new music completely washes over dialogue and sounds which seem important and creates uncomfortable discord when it clashes with existent music.
Some scenes which are practically sacred in the original cut of ANH (like some of the droid exchanges) don't seem at this point to be so vital in this take of the story Having music playing over them but still faintly hearing the dialogue makes it seem important enough for me to want to hear but the music which changes the tone of the scene in an interesting way is not blocking the dialogue enough.
A decision has to be made about how much do we need to hear in this edit and which part of the equation is more important, the new music or the original dialogue.
The template for this sort of edit is The Godfather Part II which included very early moments in Vito's life.
There are points where I could see moments from TPM working better than moments from AOTC.
For example you have Anakin and Obi-Wan talking about Shmi in the cringe inducing elevator scene, when showing Anakin leaving his mother instead would set up the later scenes of his discussing his dreams.
The cut away from entering the bar in AOTC to the binary sunset in ANH doesn't work it lets the air out of the balloon of the action scene and blasts it into the quiet meditative scene.
What you need is to compare like with like.
The assassination by millipede scene for example would might up better with the Tusken attack as they are physical attacks with binocular observations playing a key role.
The OT music on the speeder chase doesn't quite work either.
It's too heroic, it doesn't match the sense of jeopardy and danger that the action is showing.
One juxtaposition that really does work however is Luke wanting to know more about his father and being frustrated by Owen and Anakin worrying about his mother while being frustrated by Obi-Wan.
I found myself caring for Anakin for the first time since seeing the original material thanks to that combination.
I shall keep trying to watch more and let you know if anything else comes up.