Nonlocal quark bilinear operators connected by link paths are used for studying parton distribution functions (PDFs) and transverse momentum-dependent PDFs of hadrons using lattice QCD. The nonlocality makes it difficult to understand the renormalization and improvement of these operators using standard methods. In previous work, we showed that by introducing an auxiliary field on the lattice, one can understand an on-axis Wilson-line operator as the product of two local operators in an extended theory. In this paper, we provide details about the calculation in perturbation theory of the factor for conversion from our lattice-suitable renormalization scheme to the MS-bar scheme. Extending our work, we study Symanzik improvement of the extended theory to understand the pattern of discretization effects linear in the lattice spacing, $a$, which are present even if the lattice fermion action exactly preserves chiral symmetry. This provides a prospect for an eventual $O(a)$ improvement of lattice calculations of PDFs. We also generalize our approach to apply to Wilson lines along lattice diagonals and to piecewise-straight link paths.
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