ANTR is considered better because it's the true story (more or less) of the ship's sinking, without fictional characters, a sappy love story and cartoon villains to mar the narrative. It's a complex narrative that shows in a realistic manner the events of that night, how people behaved, the venality and heroism that occurred, the depth of the tragedy. ANTR is also far better written and directed than Titanic 1997, with its one-dimensional cardboard people, a know-it-all heroine and predictable plot. The real life drama of the Titanic was vastly more compelling and interesting than any phony melodrama.
Obviously it has its share or minor errors: Guggenheim was not only younger than the actor playing him in ANTR, he was an American, not English -- but then he was younger than the actor who played him in Cameron's film too; the ship didn't sink in one piece but broke in two, which was stated by some survivors but not accepted in the official reports, and not confirmed until the wreck was found in 1985; and a handful of other, small, items. Overall, ANTR sticks pretty close to the facts throughout.
As to your other two questions:
I also don't know why Molly Brown (her name was actually Maggie Brown) wasn't called by name in ANTR, where she too was played by a British actress. The film also never named the Chairman of the White Star Line, Bruce Ismay; other characters simply called him "Mr. Chairman". I've often wondered whether legal action was threatened, or permission to use a person's name denied, by these people's families.
Lightoller was a more complex character. Walter Lord used him as a convenient hero for his book, and the depiction of him in Titanic 1997 is pretty clearly inaccurate and unfair (as were those of most of the "real people" depicted in that film). But he may not have been as forthright and upright as Kenneth More plays him. Lightoller became something of a hero in real life after Titanic, and was by all accounts an exemplary seaman with an honorable career overall. But he also had an eye for self-promotion, and did tend to embellish his role on Titanic in his later accounts of the disaster. Lightoller died in December 1952, just as production on the film Titanic (1953) was finishing up, and in that movie he's also depicted as a hero, albeit a somewhat minor character (the actor playing him, Edmund Purdom, didn't even get screen credit, though he's in several scenes and shown as a man worried about the ship's course).
Incidentally, the suicide of First Officer Murdoch shown in the '97 film was an utter falsehood. Murdoch died (the other officers survived), but by drowning. This depiction caused such outrage among Murdoch's family that they demanded and got an apology from Cameron for his unnecessary slander on the man.
Titanic (1997) is worthy for two, basically technical, reasons: its stunning rendering of the ship (recreating the staterooms, dining rooms, and so forth, almost to scale), and its spectacular and reasonably accurate rendition of the sinking, which is truly amazing (both in its exterior and even more interesting interior shots). Otherwise, as drama, it's arguably the worst Titanic film yet made.
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