Was just browsing and came upon this topic but I think some are missing the point by what was posted previously. From what I gathered, Chjaiyo only has the rights to the first six Ultraman shows:
Ultra Q (1966)
Ultraman (1966–1967)
Ultra Seven (1967–1968)
The Return of Ultraman (1971–1972)
Ultraman Ace (1972–1973)
Ultraman Taro (1973–1974)
This was according to the 2008 decision handed down by the Supreme Court. The decision referred to the fact that Sompote Saengduenchai was not a co-creator of the UItraman characters or series and that Chaiyo was ordered to stop producing new Ultraman movies and TV shows because they only had the rights to the first six shows. Far as their rights go for the shows, Chaiyo holds the rights to distribute the first six shows outside of Japan and that Tsuburaya Productions is prohibited from releasing the first six shows in any format or distribution method. Tsuburaya only allowed to distribute any movies and TV shows after Ultraman Taro since Chaiyo did not have any rights to any movies or shows after Ultraman Taro. Chaiyo assumed that they did have those rights and that they even tried to create new characters for new movies and TV shows and that they were even in the middle of producing those when they were ordered to cease production because of the court's decision.
Without the ability to get their hands on the original masters and audio to release high quality versions of those first six shows, Chaiyo is simply out of luck. The thing is, it's rumored that Tsuburaya Productions has uncut English dubbed masters of the original 1966 series but that it would never hand them over to Chaiyo because of the shenanigans that they played with the courts regarding the disputed contract they have.
But, the reason the Mill Creek release has such horrible quality is because when you pack so many episodes onto a single DVD, the compression rate is going to affect the video quality of the DVD content. The more episodes you jam onto the DVD, the more the video quality is going to suffer. Try to burn a DVD with the same intent in mind and you'll see what I'm talking about. The upcoming lawsuit has more to do with UM Corporation suing Tsuburaya Productions because they released the original Ultraman series on Youtube. For those who don't know, Chaiyo transferred the rights to the first six Ultraman shows over to an American company, UM Corporation. It's UM Corporation who has filed this new lawsuit against Tsuburaya Productions.