I would use the Blu-ray as a base and upscale the 720 as needed and then use the DTS track as the main audio. Watch out because the 720 isn’t cropped as much as mine is and is a slightly off AR. You might need to crop.
Yes, I agree.
And I generally use a correctly cropped workspace anyway, and simply add the black bars at the rendering stage. So issues with the AR should be obvious while working.