Yeah, the three of them generated more than a billion dollars together in the US. As you said, that doesn't equal quality though but it does show that people enjoyed them. And love it or hate it, The Phantom Menace made $430 million so someone liked it. :)
That sac holding his organs could be airtight and the parts used to build him could have protected his internal organs. Or maybe his alien physiology isn't affected by it. If those explanations don't work for you, how about it's a Star Wars movie. :)
It was on starwars.com that the Yoda puppet has been replaced in Episode I. However, I'm sure it won't be available to the public until 2007 (assuming there's some sort of megaset).
I saw it a few times in different theaters and some sounded incredible and some sounded lousy. I think I would have liked to have seen it in the theater that Ric saw it in. At least once. :)