Indeed, much like some of the reactions to the original Gladiator transfer, there is some exaggeration going on. Have seen the Fellowship of the Ring and there are some scenes which aren't anywhere near perfect, but they are still an improvement over the DVD version. To say they couldn't be improved would be as much of an exaggeration as saying they were "truly horrendous". More accurately, some scenes are average and there are indications that DNR has been used (which for some reason tends to cause more international outcry than anything Gaddafi could have done). However, there are also some scenes which look absolutely incredible. So its ups and downs. On the other hand, the audio is fantastic as I remember.
Haven't seen the final two, but from what I've read, things improved considerably on the video front, so all in all, I'd say it was a worthwhile set to own if you're not interested in the special editions, especially given the trilogy can be found for just over £15 these days.