i think the problem lies more in targeting the current market than pleasing an old one. a lot of us are older here, and growing up with videogames, ffvii really marked a turning point in videogaming for me especially.
a more rational dilemma might be that launching a full-scale effort to recreate the game might realistically just not be a fiscally promising venture. i do love to revisit games of old; gamers have a thing about sentiment. but gaming has come quite a ways since ffvii originally released on ps1, and while it remains a landmark in gaming in my mind, it's not what modern day games are.
mind you, they wouldn't be simply remastering the game. a recreate ffvii would be just like development and production for a brand new game, only that they would know what characters they're using, the plot, and an idea of the schematics. they'd have to do an overhaul on the battle systems, make decisions on what to add, what to leave out, re-do all movie sequences.. pretty much just create a brand new game. on a square-enix scale, it would seem to me that this is a lot bigger and would require a lot more money and effort than any regular consumer can even begin to imagine.
the risk is that with all the hype, they'd have to truly bring out a masterpiece utilizing the resources available now to rival the effect ffvii had in its heyday, and it's possible they could fall short of expectations.
they'd also have to consider that doing this would mean that they would need to capture the gaming market as a whole, old and new gamers alike. i would venture to guess that if ffvii was just redone graphically, the majority of sales would be with people already familiar with the game.
imagine what it would take to redo FFVII to the effect of the graphics used in advent children. that can not be a cheap thing to do.
i'm just trying to play devil's advocate. i'd love to see a remake as well.
I honestly think they could reap windfall profits simply by re-releasing the exact same game with revamped visuals. Go play Counter-Strike or Modern Warfare 2 and see how many kids you see with hilarious names like xSSJxSephirothKillax or some similar variation; He's one of the most popular video game villains ever, even among younger gamers (ex. names like the one above).
I don't believe FF7 would need any modifications whatsoever, other than graphical ones, to succeed financially as a re-make. In fact, I'll go one step further; modifying the core game elements in any way OTHER than graphically would likely attract a tremendous amount of negative chatter among the gaming community. Granted most of this negativity would originate from the purists who would want anyone responsible for desecrating the original masterpiece drawn and quartered, but you can bet the vocal minority would have a profound effect on new potential FF7'ers trying to decide whether to try the game out or not.
My only point is that every game needs certain elements to be hashed out and constructed before it can be launched. Every single element has already been invested in and created for FF7, and they can re-use ALL of it except for the graphics. I don't see how it could cost them more to re-do the graphics for FF7 than it cost them to produce the ENTIRE FF13 title (which FF7 would likely outsell a couple times over).
If they were super smart, they could also use the re-release as a springboard for more titles featuring the same characters but perhaps along a different storyline? All of Cloud's friends die in the Midgar reactor explosion and he must venture out alone to find Sephiroth, convince him to halt his quest for self-deification and help to stop Shinra before they destroy the planet. Then, once complete, you could choose to battle Sephiroth to prevent him from turning the planet into his own private spaceship, or... well, you get the idea
Case in point: I think this thing would make money if properly marketed and leveraged. I would be very interested to know what went on behind closed doors when they discussed the possibility of a remake, because I'm 100% sure the discussion happened.