They most likely had the admirable aspiration to try to increase the quality of the mp3s. Reported post from Charlie who runs the official site re conversation with Gary Smith, Elliott Smith's father: 'while we were talking, we talked about sharing/trading elliott's music and he thought it was important to mention it was ok to share or trade elliott's music because elliott believed people should be able to trade musically with each. Here you can download xo elliott shared files: Elliott Smith XO.zip from 36.92 MB, Elliott Smith - XO.rar from 41.12 MB, 1998 - Elliott Smith - XO.rar from 70.25 MB, Elliott Smith - XO.zip from .nz 286.26 MB. Whoever made Grand Mal took the (probably painstaking) time to edit the files, either when it was first compiled or when it was 're-released' in 2012. There is now a collection, called The Moon is a Sickle Cell, which includes material that isn't on Grand Mal as well as live versions, and all of the songs are as faithful as possible for leaks.
Elliott Smith fans have had a rarities collection available for download for a long while called Grand Mal and it has circulated quite well in fan communities.