@bkev - Unfortunately, that comment probably encompasses all restorations from Disney done in the last 12-13 years. (Post-Lowry?) I wouldn't think this method was used on any CAPS based or newer films. (Those are messed with a whole different way).
It's a bit of a muddle. Wikipedia claims Lowry restored Snow White, Sleeping Beauty and The Little Mermaid among others, but I believe Disney restored Little Mermaid themselves. I think Lowry may have done some work on earlier releases of these films or (gasp) Wikipedia might be wrong.
This article put me on to it: http://colorfulanimationexpressions.blogspot.com/2008/06/thinking-about-digital-restoration-of.html
What bothers me most is the technique of separating the characters from the backgrounds in order to remove grain and lighting inconsistencies (see 2nd disc of "Sleeping Beauty"). This results in a CG-compositing look that draws attention to the absolute rigor of the backgrounds. As the ever changing grain rightfully may be seen as a flaw inherent to the medium, it nevertheless helped to keep the image alive. Without the grain, the characters' color areas are even flatter looking and the movie seems to freeze whenever a cel is held for several frames (quite often in "Dalmatians"). This ultimately draws our attention to the artificiality of the animation instead of letting us engage with the story.
Googling around, I found the 2003 Sleeping Beauty bonus mentioned above: http://www.youtube.com/watch?v=x-z0o26HD40
Apparently they went through this AGAIN in 2008 for a 4k transfer.
Molly is bang on. They are now reanimating these cartoons (I don't even want to use the word "films" anymore).
I'm trying to decide what to do about this guide now. Some minor clean up is one thing, even the occasional odd color choice (since older transfers have probably discolored worse), but when you remove all signs that these films were painted on cells and photographed to film, then what are they?