Respectfully, I think you've missed the point.
1. No amount of digital conversion will ever completely replicate an original analogue master, whatever it's shortcomings. You can't get better than the original data, and in the future new techniques might let us get more out of it (like when they found it was possible to extract colour data from some old B&W TV recordings - you would not have been able to do that with B&W digital copies).
2. The quality of such unreleased recordings varies. Some are very good or at least tell us a lot about the songwriting/recording process and the artist's musical journey. In any case most of these tracks will be better than the likes of me will ever produce!
3. An original master is an important document. Anyone (even me!) who has played with their own recordings, however humble, will know you can get very different results from the same original material - only last week I listened to some recordings of mine and realised I could have done a much better job with some simple changes. I have the original 4-track cassettes and may have a another go! And imagine what could be achieved by going back to 1930s recordings of the old blues giants?
4. Of course released music has been lost, but out of 500,000 tracks I very much doubt all the unreleased material was crap.