Actually, the Castle Anthrax scene was restored for an RCA CED Videodisc release in 1983.

http://www.cedmagic.com/featured/monty-python-grail.html

Not sure if it was included on any other format release before the Criterion Laserdisc release in 1992. There is a noticeable change in color and aspect ratio where the missing footage was spliced in on the LD. I could try to get some screengrabs if the CED info isn't enough to go by.

1:66 is quite common in Europe, so the movie was probably shown that way across the pond.

Msycamore and I have been discussing getting the complete Japanese track on the Criterion LD translated and subtitled. We need someone fluent in Japanese to pull that off though!