Use of "dame de" etc. in article

Hello; I'm reading an article from a programmer who worked on a horror video game, and I'm having trouble understanding a couple sentences. For context, the whole article is here:

https://web.archive.org/web/20170214082134/http://www.konami.jp:80/gs/...

1) In the first troublesome sentence, the programmer is talking about difficulties in creating the art for the videos that played in the game.

ある程度、では駄目で完全に再生して絵の出るデータを作る必要があり、日々トライアンドエラーの繰り返しでした。

I don't quite understand the role of the では駄目で here. Is it something like: "To an extent, well, this is no good, and we needed to replay the whole video, then create the data that produced the art"?

2) The second problem sentence is when the programmer tells his assistants that a lot of their work has to be revised. They respond:

「……良くなるなら…」「………やりますか…。」……と言ってくれた瞬間、僕の心は救われました。

The responses are very simple, but I don't quite understand them. Is it something like: "If we make it better..." "Will that help?..."

Thank you for any assistance.

(1) What they mean should have been written like this:
ある程度（できる）、ではダメで、完全に再生して絵の出るデータを作る必要があり…
ある程度（再生する）、では…

Getting things right only to some degree was not acceptable; we needed to build data that would allow complete/perfect reproduction of the images, so it was iteration of trial and error day after day.

(2) This is referring to the reactions of the assistants, who were shocked and maybe discouraged to see that they would have to redo and revise a lot of work, right? So by the time they started (though hesitantly, as shown by the “…”) to react positively, that saved him, because he was feeling so bad about it. So it is like:
The moment they kindly said “… well, (if the revision) is going to improve things…” “… I guess we will do it…” my heart was saved.

Thank you so much once again for your help—particularly given how far-off I was!