The French Quarter was basically untouched by Katrina. This is why it looks like it always has. The problem is once outside the Quarter, you begin to see all the damage. Like you, I was there a few weeks ago and you would never know the extent of the damage if you did not venture out of the Quarter.
As far as the All-Star Game goes, I think it's a bad idea. You are going to have a TON of people there due to New Orleans location on the map. A lot of people are simply going to drive there to party that weekend. Its going to be a zoo and if you have ever been to Mardi Gras (pre-Katrina), you know what I'm talking about.