"As I understand it, the idea is to do the best possible transfer of the laserdisc set, rather than try and recreate the original '77 release, in which case I guess they will be leaving it in??"
To begin with, yes. At this time, we'll have an excellent master to work with, and perhaps edit to resemble the original edit as closely as possible. I already have a recreation of the original crawl based on the one shone in the DVD documentary, and I believe we pretty much have all the original audio snippets like C3PO and so on.
Believe me, we've thrown around a lot of ideas about what can be done after the original transfer is made. We're just too focused on the current work to decide what will happen next, which makes sense, since this work has to be done first anyways.
[EDIT] Hell, maybe we'll make our own 3-D version!
I believe it went up to Luke and Obi-wan going into the cantina. I'll have to double-check that.
Unfortunately, correcting this version isn't that easy. My earlier work was on the Faces set. The Definitive Col, while showing the same kinds of errors and dropouts, has some in different places. Many of the fixes I'm making are at the pixel level as well, and it's mostly a question of checking each individual frame. There are some segments that have little or no errors, and some that are rife with errors (The jawas at the Lars farm comes to mind as one of the worst.)