The two verbs in the imparfait, étais and allions, are background information. They are descriptions of a scene, and as such, are not discrete events that take place at an exact moment, but rather over a long period of time, and that is why they are in the imparfait. Background description, scenery, and such; these are almost always in the imparfait. The verb in the passé composé, a vu, is a one time event.
We went to the movies every Saturday, thus imparfait, but just the one time, we saw Les Misérables, so it is in passé composé.
If you visualize a timeline, events in passé composé would be like single dots on the timeline. They are single events, and take place once, at a known time. Events in imparfait are are long lines along our timeline. They last for a period of time, and usually take place around our story, giving a description.
Another way to look at the distinction is to remember that any verb can be conjugated in both tenses. In English, take the sentences "We drove to the movies," and "We were driving to the movies."
While the sentences are identical, other than the verb tense, the first one is understood to be a single event, and you don't expect to hear more about what happened during the trip, but rather what happened after the trip. With the second sentence, however, you are expecting to hear something more about what happened during the trip. This is very similar to the difference between passé composé and imparfait.