I believe that "degraded" comment was in relation to the last theatrical "Special Edition" release (something to the effect that "if we hadn't done something now the film stock would have become unworkable").

It looked just fine thank-you-very-much in theaters a few years ago, so I'm sure it will look fine on DVD. I was under the impression that a) he was too busy to do all the extras he wants and b) he wasn't done fiddling with the first movie yet.