This'd be a good project, and I think emanswfan is still planning on giving it a try.

For my own project, I merely upscaled using Apple's Compressor app. Though I also added a uniform layer of film grain to my project, which helps them blend together. I also cross-faded in a slight blur to the HD footage as a deleted scene approached and after it was over. The effect is that the HD footage starts to blur slightly for ten or so seconds as it is about to go into a deleted scene. (The deleted scene itself is not blurred.) Then after it's over, it starts slightly blurred and gradually comes off of it.

I don't know; it's better than nothing. And you're right, it's absolutely worth keeping some of those scenes for story purposes.