I'm sure the new transfer will make it worthwhile. I think now is the time to assemble the G1 Movie wave toys from their various homes in preparation. First time I'll have had them all out together having added the last few missing ones over the last couple of years.
Widescreen is indeed cropped. The film was animated in full screen and matted for theatrical presentation in theatres so newer home video widescreen versions show it closer to how it was presented at the time though do miss detail. While unusual, some films are made that way. 'Babe' is another example.
I would speculate it was animated in full screen as home video/tv formats of the time were in 4:3 so perhaps that was where the makers thought it would make most money?