| Why, when films are digitized, don't they use the maximum bit rate possible such that the film (and extras) will still fit on the disc??? |
It's a lot more complicated than that. With MPEG2 encoding, the higher the bit rate does not necessarily equal higher quality.
| there are not any scratches to speak of, but what makes it look poor is the extreme compression. |
Is the video grainy/noisy? This will result in the compression looking poor.
As others have noted, getting a film to DVD takes a while. Time is money. Everything happens at a fraction of the speed of real time. The longer you work on the transfer, the better it will look, but the more it will cost.