There is little doubt that Final Fantasy VII is one of the most (if not the most) requested remakes of all time. But the endeavor poses a dilemma : how to please both the fans and the newcomer.
The financial aspect of the remake is essential, as the production cost of this game would be huge. Sure, the developer would save (some) money on character design, story and art direction – but if you factor in that 95% of a AAA video game production cost nowadays go into graphics, and that creating a game while being forced to reproduced given environments instead of optimizing level design according to available technology inflates the cost, you might ask why Square would bother doing this instead of, say, Final Fantasy XV or XVI.
However, there could be a few advantages in remaking the legendary J-RPG. First and foremost, it would convey the feeling that Square listen to its fans, which, from a marketing standpoint, is essential. Second of all, it would bring the series into a more public view (one could easily imagine "most demanded game remake of all time costing 100m$ to produce" in mainstream newspapers). Third, Square could capitalize on the graphics engine and assets developed for the remake to produce a couple of sequels (VII-2 and VII-3) that would in turn probably cost much less to produce than the remake and sell better than XIII-2 and a potential XIII-3. Last but not least, Square could subcontract a significant part (albeit not all) of the remake's production to a less costly team.
If things were not complicated enough from a financial standpoint, the dilemma really appears as soon as you starting thinking about how Square could handle the remake. If nothing is changed apart from the graphical upgrade, the game will show its age. If too much is changed, the fans will be disappointed.
Take a clue from Pokémon (and Nier)
The best selling RPG series of all time is Pokémon. Do you know what Pokémon does ? It spawns (at least) two versions of each games on Day one. Could Square pull of the Final Fantasy VII remake by making two versions of it ?
Final Fantasy VII – Old school version
The old school version of the remake would essentially be a graphical upgrade and a few gameplay tweaks here and there to make it more player friendly without touching any core mechanics (like an "heal all" option a la Dragon Quest, "suspend", "fast forward combat" etc.) . The script would be left untouched, and a some gameplay options would be given to the player so that he could enjoy the combat system more to his liking (ATB or completely turn-based a la FFX – which is basically the same as the "wait mode" from the original – difficulty modes for veterans). But essentially, this version would allow Final Fantasy VII most hardcore nostalgic to relive the original game with HD graphics.
Final Fantasy VII – New school version
The new school version could be Square's chance to show how they can implement new, more modern, gameplay mechanics that would be more fit to the newcomer. Although it has been shown that Japanese turn-based RPGs actually sell better than their action counterparts, this could be the time for Square to show off a new, refined, ultra-responsive gameplay and to edit the script the way they believe it should be edited. If Square is afraid that the game hasn't aged well, this is the version that takes care of this problem. Since the other version exists, Square has a lot of freedom in this one.
Square could have its cake and eat it too by increasing the game's production cost by 5%
Basically both versions could come out day one, share the same graphics and most of the script, which would mean that most of the production cost would serve both versiosn. As a significant amount of gamers would actually buy both versions (if Nier 's and Pokémon's experience is to be believed) this could be a great way to pull off the remake.