And that footage was taken from an episode at the back end of Season 7, I'd be amazed if the early series' negatives even existed, let alone in a usable condition.
Why? They had the negatives for TOS and that was from the 60s. I would imagine they would keep all the TNG stuff as well once Trek got big again.
And really, the only thing about early TNG that looks terrible are the VHS transfers, which aren't going to be used here.