As the title says. They looked badly compressed even in the original at the time.

They were able to get a lot (but, sadly, not all) of the original material from 1998 to work from (which was stored on many CDs back then, and is now on one backup drive), so this is indeed as much as a remaster (that is working from the original master material) as possible.

The cutscenes do seem to have been one of the materials that they were able to get ahold of, as this article on the remaster states that the quality of the cutscenes will be improved upon the original release.

Well, having HD and high quality versions of those cutscenes would be near impossible without remaking them completely, because it would require to re-render them from the original files that are now more than 16 years old.

That said, if I remember well, the first video about the remaster shows that they have been able to put their hands on most of the already rendered cutscenes from back then, before they have been heavily compressed to fit in the original game CDs.

See this.