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As far as I know, the final source code of DMC1 is lost. It comes from an era when companies were considering games (just as TV series) as "consumables", meaning that once they met their goal (release) they just dump the working files in order to free their disk space (which was expensive at that time) so they could start working on something else. They never believed they would be re-using their 2000s game's source codes 20 years later.
So they used the retail version and some leftovers from the original code to rebuild it like a jigsaw puzzle.
Second issue was that some effects (like the underwater one) were designed to use the ps2's emotion engine so they had to remake those from scratch, and the final result is not always great. This is a common issue, and a lot of ports or remasters of ps2 games share that issue, like Silent Hill 2's Fog for exemple.
Also, considering how much power this collection asks to run properly, it's at least half emulated (and it was already the case on the PS360 versions).
Sourcenext's original port of DMC3 SE, as horrible it is, is nowhere near asking the same kind of compute power, and animations were not tied to framerate, which is the case here. Sourcenext's was at least letting you set up the game's resolution from inside the game.
Could they have done a better job?
Yes, of course.
Best way to do so was to pretty much do the same as Square Enix did with FFVIII Remastered: A full reverse-engineering of the retail game. The thing is, not only FF is a way more popular franchise than DMC, but we are talking about the 4th release of the three DMC games! Original Launch, 5th Anniversary Edition, HD Collection on PS360 and this one. Capcom may be the king of rereleases, but this one barely makes any money anymore. And the steam sales of the DMC HD Collection talk for themselves: In the first 6 months, it barely sold 20k units! (source: steamspy when it was a reliable tool).
So, could they have done better? For sure! But not only it would've been very difficult and expensive, I highly doubt it would've been worth it. In other words, I don't think it would've made any difference in sales numbers.