If you want to preserve Little Mermaid, get yourself a laserdisc player and any of the older laserdiscs and do a rip of the PCM track.
Heck, get me a copy of the audio track and I'll sync it for a second edition if you'd like. Preserving a TV recording on VHS sounds pointless, but maybe that's just me.
It's important to understand that when stereo audio is mixed for theaters, there is a 3d holophonic soundstage. It should be unnecessary to explain that sounds can seem to come at you from various directions including behind you in these situations.
Dolby ProLogic and similar are capable of interpreting this from 2 channels of input and localizing them to specific speakers to improve the quality and make it so everyone doesn't have to sit in a tiny little sweet-spot to get the effect.
Upmixing from this is quite possible and the masters may even already be multiple channels to start with. The can simply use the same audio, and with some small tweaks pass it discretely instead of all squished together into 2 channels.
Now that goes out the window with Disney's DEHT mixes which are designed for "home theaters" (which means idiots that can't set up their system, don't know how to use the audio menu on a DVD, or are watching on a 9" single speaker television).
But... most studios make a deliberate effort and tend to do a pretty good job with an upmix.
As far as full frame, this has been discuss before as well.
A lot of times animators will work with the full cells when creating animated movies and down the road TPTB decided they want to make it widescreen for greater impact or marketablility or whatever.
To do this they just crop the film when transferring it.
Sure you are most familiar with the widescreen presentation, but the animators never did all that work with the intention of a portion never being seen.
It's not the same as cropping live action films for widescreen, because in those cases there is a cinemetographer who knows what will and won't end up in the final shot composing the action based on that.