Credit: -user- Kentai, of Blu-ray.com
If we're talking GHOST IN THE SHELL (1995), that's not correct. Not exactly, anyway. Per the interviews given by the technician at Q-Tec*, this was indeed a new 5K/16-bit scan of a 35mm Interpositive - one minted when the film was finished in 1995, no doubt, and likely the ultimate source that quite literally every home video version of the film was taken from, as Manga Video has largely re purposed Japanese video masters for non-Asian releases anyway.
There are numerous scenes in GITS that were created using a primitive form of digital compositing - some obvious examples include the the slow zoom-in of Motoko when she's listening in on the conversation on the rooftop, the scene where the city distorts behind her as she gives Batou the monologue on the boat, and the shot where Motoko turns her head on the ferry during the long silent sequence about half-way through (ie: the one featured at 21-seconds in on the 4K BD trailer back on page 4 of this thread). These scenes were made using a combination of high-resolution cel scans, full-resolution CGI, and "SD Video" elements (for the GPS tracking, etc) to give viewers a familiar 'computer graphics' display circa 1995.
Due to the surprisingly... unpleasant looking nature of the film, it didn't seem unreasonable that the whole feature might have been produced using this "Digital Cel Works" process - after all, it was competing with Disney titles which were being made entirely using the CAPS system, leaving film and physical cels behind entirely. However, the vast majority of the film would still be shot on 35mm, using typical animation stands and the only "digital" part of the process would be the fact that Dailies would be scanned into an AVID system and used for editing, being cut together by hand at the end. There's actually little reason to assume this wasn't all cut together on a standard 35mm negative as a final step, and knowing Oshii's attention to detail, it's not unthinkable that all color grading and optical fades/dissolves/etc were done at the lab, making a finished 35mm IP the "Final" approved master with the correct color timing and so on.
What makes me say this? If you look carefully, you can spot things like shadows between the cell layers, which simply wouldn't exist had those shots been composited digitally. Another example is a fade-to-black as Motoko walks away from Aramaki after looking over the brain-scans, which is clearly an optical effect with additional damage and density flicker, implying it went through a separate process than the scenes before and after it. There's also the fact that many of the iconic CG shots have issues like aliasing, fuzzy high-frequency grain and similar artifacts that DON'T seem to affect the bulk of "normal" scenes, which suggests they were produced using entirely different means. Unfortunately the marketing of the film dictates that they focus on the cool, cutting edge stuff - not the boring, everyday filming and editing methods - so we can only look at the end result and try to reverse-engineer those inconsistencies ourselves. I think this is a case similar to the original Jurassic Park, where the marketing focused heavily on the CGI because it was a unique hook, leaving a lot of people - myself included, until quite recently - to assume that far more of the film was using modern technology than it really was. As such it's easy to assume the film "should" look ugly due to the creation of it, but in reality it's only an issue for scenes created with those effects specifically, the same way older films may have ropey looking opticals or badly-integrated CGI effects.
So why is the flick so dim and grainy? I'unno. It could be a lot of things. Japanese films from the 80s and 90s were often shot on fairly crumby film stock to save money, and a lot of labs trying to save a buck use chemical baths that expose film faster at the cost of fidelity; for low-budget movies that'll mostly be seen on home video this wasn't considered a huge problem at the time.
Maybe the negative wasn't kept for one reason or another - maybe they printed the CGI effects straight to positive stock and decided to reverse the OCN to 35mm for consistency's sake, or maybe the film had extensive color timing applied at the lab in the final hours to get a consistent "look" between the analog and digital material. Who knows? All we know for sure is that particular 35mm IP is grainy and unstable as hell, and that the new 4K master is the best it's ever looked. It ain't perfect, but considering how crumby everything up until now has been? Yeah. That's probably as good as it's gonna' get.
Make no mistake, there's been a lot of grain reduction applied - but it's seemingly been done with care and with every intent to not remove all of the detail, with artifacts being far less severe the higher resolution you go anyway. There's that slightly unpleasant "Stuck Grain Pattern" effect where their attempts to keep fine detail turn the grain into a sort of slow-moving or even static texture rather than an organic field, but... well, this is is one of those cases where the grain has always been so extreme that, yes, going frame by frame solid character outlines can be hard to see. The DNR has mellowed a lot of that out and made a more stable image overall - but it's also blurred out the raindrops in the ferry scene and produced some funky smearing artifacts on long pan shots. It's not awful, but it's not the 11/10 perfect "filmic" presentation I was hoping for, either.
* To be fair, Q-Tec is somewhat infamous for some really, really bad upscales early on in anime's Blu-ray lifetime - but the reputation is only half-warranted. They've been around since 1989 and have done as much good work as bad since they were a film lab back in the day before they focused on digital media - the problem is a lot of the titles they were working with at the time were low-rez and funky looking to start with. That doesn't mean they did a particularly great job of it, but when you're handed a Digibeta for FLCL, or a D2 for 3X3 EYES... well, it's not gonna' look great no matter what you do.
That said, holy sh*t, that Innocence upscale is trash! Again, the source was no looker to start with - there's aliasing on the original animation and digital grain was added to help blend the 2D and 3D elements without making it super obvious - but I'd have taken a sharpened upscale with additional layers of dithering over that smeared DNR abomination. They've also crushed the shadow detail entirely with certain "dramatically lit" scenes, just looking off as a result. I didn't expect Innocence to look great, but this was dramatically worse than I'd expected.
