I'm not aware of anything that can yet effectively remove dropouts/sparkles without also messing up the video along the way.
Loose particles can cause dropouts, too. TapeChek decks will clean tapes of loose particles, but you're looking at $10,000 or more for one of those. And even then, there's no guarantee the cleaned tapes will be any better, if the dropout is not caused by dirt/particles loose or semi-loose on the tape.
There were those few TBCs that could overcome dropout noise, but the results there would also vary. I had a TBC with this dropout compensation feature, but it easily got bogged down and let dropouts slip through if the tape damage was even moderate. It only worked well on tapes with few dropouts.
Software painting frames manually is really the only solution left. But manual painting is going to need to work around the interlacing, and that can't be an easy task. I don't know of anything automated -- at least not for interlaced videos. I think NeatVideo would get closest, but I don't believe this feature is part of it.
There are some "sparkle removal" type filters out there, such as Skating Rink for
VirtualDub, but it doesn't help much.
VirtualDub's Median filter works well, but the footage must first be deinterlaced. Avisynth experts pretty much agree that acceptable results from similar cleaning operations, using Avisynth filter methods, require progressive/deinterlaced video frames. Same for VirtualDub experts.
VirtualDub does have the ability to separate fields, but it fails to work properly after a median filter is applied. The output is all butchered up.
Studios generally deal with film or progressive sources only, so there's not been a heavy professional need for cleaning up interlaced video. Even when you do see "restored" videos, you'll notice dropouts tend to be left as-is on interlaced footage. In some cases, it's been deinterlaced, and you can see the tell-tale artifacts. The degree of artifacts will vary from content to content, of course.
Look at getting a Panasonic AG-1980P as a backup to a JVC S-VHS series machine. Anything the JVC cannot handle (maybe 10% of all tapes?) is usually handled well by the Panasonic. If neither deck can play the tape, you have to rely on various consumer models (old 1980s decks, 2-head cheap decks, Sharp 4-head decks, Toshiba 6-head VCRs), or you'll need a VCR that you can "play with" and alter the tracking zone and alignment. And if none of that works... well... you're screwed. The only VCR (or camera) that is likely to play such a tape is the one that made it, as it's clearly far out of spec.
Be careful buying TBCs from eBay. I'm a big fan of used gear, but the AVT-8710 can overheat if used wrong and that causes major damage. Make sure it's tested, and is known to output a good signal. This model often goes for $150-190 when it's actually in good condition.
