I think Episode I can be improved upon through the rewording of the crawl, new voice over dialogue for both the Neimoidians and Gungans (so they sound less comical), and snips and tweaks that enhance the actor's performances and action sequences.

The hardest thing would be the voiceovers. I have yet to see someone do it in a professional way. I also think that if there were a lot more dialogue scenes that we're zoomed in (so there aren't that many silly cgi background distractions) it would improve a lot more of the performances, too.

In my opinion, butchering the story down to a hour long film is a waste of time and not worth watching. One only needs to do is make a point that the films do connect together, by making it known that the Clone Wars will start here with the acquisition of Naboo. The crawl should mention why this is — by being the sole place in the galaxy to contain a rare element that emanates a powerful energy that can be used in accelerated cloning, the Sith require it to begin their war against the Republic. Rewording the crawl to state the importance of Naboo is the first thing that should be done, so we the viewer know why the Federation wants it so badly.

Well, in any case, the mention of Naboo's rich plasma resources should be mentioned in the crawl, because it will also explain what that power facility that they fight in really is. ;)