I've always liked this film and bought the Region 1 DVD when it was released. As a straight-to-video movie it's better than most. However, the picture quality has never been great; so it was I looked forward to watching this release. I actually bought the Trilogy boxset and have reviewed #2 as well. The boxset was definitely the way to go for value...but, if you're thinking of buying that box just to see what the sequels are like I'd wait until it's very cheap.
Hangman's Daughter is actually a prequel and is set in the Old West, many years before the first film. What I liked most about this film was the way it tied into the first film and the fact that it took itself seriously again (the first film, while very funny, never 'plays it for laughs' which the second film did abysmally). The story cracks along at a fair old pace; but as with the other two, it's not until the vampires turn up that the film really finds its stride. Anyway, if you're a fan of the either of the other two then this one is worth watching.
However, the blu-ray is barely better than the DVD. Yes, the upgrade to a DTS audio track is very welcome; but the picture quality isn't anything to get excited about. At various points I thought I was watching the DVD. There are moments (usually on close-up shots) when the image is nice and sharp; but these are few and far between. Also, the colours seem to fade in and out in various scenes. Given that this is the most recent of the three I'm surprised they didn't do a better job putting it onto blu-ray.