Rick:
Ken is correct. Film has much higher resolution than HD video, so there's lots to work with from the old negatives.
The bigger problem is damage to the original films, either by them being dirty or colors fading over the years. Restoration work on the negatives, frame by frame, is painstaking but can yield beautiful quality HD.
We watched Rio Bravo on HD-DVD last night (Thanks, CV!!) and either my player wasn't doing its thing, or there was alot of trouble with the negatives. As the opening credits are rolling, there is a line of horseback riders on a dirt road and the dirt looks like it's on fire. The rest of the movie is rather grainy.
Scott
