The SS1 remake was amazing. But you have to remember the amount of work it takes to remake a game, SS1 was in development for many years.
SS1 really needed a remake, SS1 had awful controls and cumbersome UI, combat was also a bit fiddly.
I would say SS2 is much closer to a modern game than SS1 was, so I'm not surprised they decided to remaster it. I would also be surprised if they earned back the money they spent on that remake.
Remaking a game basically means creating an entire new game, then ensuring that it acts the exact same way as the original. The remake is most likely not written in the same game engine as the original so that means A LOT of tweaking to get gameplay, combat, triggers, event handling etc. to work the exact same as it did earlier.
I just wish people would understand how hard it is to make a game. Changing the game engine could easily set the team back 1-2 years.
Yes, the new bluray version is the one to get. It is based on the original analog film which is high definition (heard it was closer to 2k ish). This is the same as the version that was available on HBO a few years back. The old DVD version was a cropped (and stretched) version of the tv broadcast version which was cropped from the original source. Anything based on that will look pretty bad.
The only thing that is lower resolution in the bluray version are the scenes where actors and CGI are mixed. They lost the original 3d models so there were no cheap and easy way to fix those.
I can also recommend the Lurkers Guide viewing order. There are also some tips on episodes that can potentially be skipped.
https://babylon5.fandom.com/wiki/Viewing_Order#lurkers