I do believe they could do better than this, seeing as how I'm using old LD masters for many shots and the whole thing is still a bit of a patch-work.
On the other hand I am afraid that they could very well screw up royally - imagine if they just went the easy way and pulled some old faded print, scanned it quicky, did some quick over-all adjustment to counteract the fading and then, because a theatrical print would be pretty grainy and soft, they'd put the whole thing through aggressive DVNR and edge enhancement - that stuff just haunts my nightmares.
It would be the GOUT all over again, except this time it would be to BD what the GOUT was to DVD - and again we would be the bad guys for complaining, because we "got" what we "wanted" and still find stuff to complain about.
I think it would be best if they outsourced it to Criterion, but that's probably not going to happen.
I actually feel quite certain that the way things are going with fan preservations, the studios will soon have a hell of a hard time to make a more quality release and would really have to go the extra mile to surpass the fan efforts - we're not there yet but given some time, we could be.