I think the sessions they're referring to are the tracks with Nick Launay included on the Intriguer Deluxe Edition. They don't sound disastrous but certainly not very successful either. And there is surely other stuff they won't release which could be much worse.
As for Neil complimenting Mitchell, I think he's just recognizing that Mitchell has a particular way of playing which nobody else can quite capture. Seems like a stretch to say that's a slight on Mark or anyone else.