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Ok, so let me make my question more specific. How much more would it have cost to do a proper job encoding this film on to DVD? Is it a cost issue or just sloppy work?
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Before you start encoding, you have to have a decent source. To get a decent source you need a decent transfer from film. Now if you assume the film elements are OK (and most aren't for transfer) then you'll spend at least a week (five dates at 8 to 10 hours a day) in telecine at $350 to $500 per hour in a decent post house plus tape and sundries.
If you need new film elements (like a new IP from a negative) then you'll have lab costs on top of that and those will vary with the condition of the negative, the timing of the negative, color correction, etc.
After you have that done, then you can proceed to encoding. But as with anything, GIGO. Many "old" transfers date to the days of "film chains" when films went to video like local television stations with 16mm prints, telecine projectors and tube cameras which results in "blended" fields and lots of "blured" frames created by those five-bladed shutters in the NTSC world. It was with the introduction of the Rank which did scans and used a frame store to build out the 29.97 that fields were "clear" and then could be reverse telecined to get decent compression on DVD.
So no simple answer without a full estimate based on condition of elements. My guess is they felt they'd make just as much money using the old transfer as investing in the new elements--an unfortunate and common approach among some "low end" dvd labels.
John