Maybe it was, because we didn't see so many details back then. But that has to be taken into consideration if you want to compare fairly.
I've been watching the VHS-UK (Pal-> better Picture than US-NTSC) versions on a small CRT-TV and "Q who" looked just amazing, especially that scene.
Compared to what I see now on the big screen from Blu-ray (I mean now especially this above mentioned shot) I really had it much better in mind, because back then it was "Oh, wow, look at that" - now it's just "Oh nooo.. what did they do??"
Well yeah, of course it looked good on the old picture tube TVs. That's what VHS was made
for. We didn't care as much about detail and definition back then, and were perfectly happy if we could just get a clear picture without any static on it! Lol
As for the new CG painting, I agree it looks overly blurred in the still shot, but in motion I thought it looked pretty damn good, and felt just as epic as it was supposed to.
To me the bigger issue are some of the stock Enterprise shots throughout the REST of the episode, where the ship is overly bright and looks like a cutout in space.