Well, my understanding was that the developers of DVD wanted to go with the superior DTS audio, but the reality was that there were a lot more DD decoders in use in the US than there were DTS. (This is the same reason that US broadcasters adopted DD as the standard audio carrier for digital tv broadcasts.)
The use of MPEG audio in Europe was also advocated by the EU as it was developed by Phillips. However, this idea was abandoned when Phillips were unable to provide the appropriate encoders in sufficient numbers to the Hollywood studios in time for the proposed launch date.
I didn't get involved in LaserDisc until 1993 so asume that I've always had the benefit of new prints, but before I went widescreen, I could not tell the difference in picture quality between LaserDisc and DVD. Even now, I still think the picture quality of LaserDisc compares well to DVD.