When I search for it, I keep seeing repeatedly that everything after Season 1 (which was done all the way through the post-production process on 1" analog tape) was done on D1 tape. But the finished episodes certainly look like it was finished on composite video.
Gear of the day was Grass Valley 300 switcher, Abekus A82, ADO,
K-Scope and 1" playback machines,
We were one of the 1st shows in the world to master final VFX to D1 tape.
Unitel Hollywood did the online
Image G did motion control Erik Nash
CIS and Price Pethel pin reg transfered from 35mm film to 1" tape
That description makes it sound like the raw footage was transferred to 1" tape, and then edited with the VFX on D1. If true, the live action being on 1" analog composite tape would certainly degrade the live action elements, before being finished on a component source.
Archived content from a The Official Star Trek Fan Club magazine issue:
Looks like the move D1 wasn't completed until Season 4. The article doesn't talk about how the scanned film was delivered at that time, so perhaps it was still delivered as 1" tape and then fed into the digital recorders they were using for editing.
Home for ST:TNG in the fourth season became The Post Group's new Digital Center in Edit Bay B. ST:TNG moved so it could work entirely in the digital format (D1) and abandon the fickle one-inch analog tape format. The reason ST:TNG was analog for three seasons is simple, the technology just did not exit. To bring this point home further, even now some of the equipment in the bay is still considered R & D (Research and Development) and came with no manuals.