2. the show was shot in sd because he believed hd upsampling was legit
B5 was shot on Super 35mm so it could be cut for either 4:3 or 16:9 aspect ratio, and was in fact shot in HD.
The issue was they rendered all the CG in 4:3 NTSC to save money, and figured that it could be re-rendered in higher resoluation 16:9 later if it got a high definition release down the line. The problem was that the effects studio went belly up or was bought out (I can't remember which) and all the original models and work were lost.
When it came time for a DVD release, all they had for the CG and effects shots were the 4:3 NTSC masters that they pan and scanned to 16:9. Throw in some botched deinterlacing and it just looks terrible
From wikipedia:
The scenes containing live action ready to be composited with matte paintings, CGI animation, etc., were delivered on tape already telecined to the 4:3 aspect-ratio, and contained a high level of grain, which resulted in further image noise being present when enlarged and stretched for widescreen. For the purely live-action scenes, rather than using the film negatives, "Warners had even forgotten that they had those. They used PAL versions and converted them to NTSC for the US market. They actually didn't go back and retransfer the shows."
With the resulting aliasing, and the progressive scan transfer of the video to DVD, this has created a number of visual flaws throughout the widescreen release. In particular, quality has been noted to drop significantly in composite shots.