Puggo - Jar Jar's Yoda said:

It's the non-anamorphic format that makes it a "horrible" release. In 2006, the choice between anamorphic and non-anamorphic is akin to simply checking a box in the encoder software. The fact that it isn't anamorphic was clearly to intentionally lower the quality. With no extra effort whatsoever, Lucas could have improved the video quality dramatically just by filling in the check box as was the case for virtually every other film release of that time.

The master used was D-1, no? If so, then making an anamorphic release would require upscaling.

Given the overall quality of the GOUT release, I'm not confident that LFL would have upscaled it well at all.