Sure, a remake would look nice, and wouldn't it be great to see all those iconic sequences and cutscenes with the same detailed visuals as Final Fantasy XIII? But play FFVII for a while with the maturity of 12 years later and you'll start to realize that those big setpieces -- from the medium-redefining opening zoom into Midgar to the sight of Sephiroth stepping through the flames as Cloud's hometown burns -- are only one part of what made FFVII so appealing. And those are the parts that have already been revisited to death through the likes of Advent Children and Crisis Core!
To be honest, FFVII was a damn weird game. It featured a number of sequences that were almost like a fever dream. Cloud getting dolled up as a girl, and competing in a bizarre homoerotic muscle competition -- possibly being molested while unconscious -- in order to max out his feminine appeal. The slapfight between Tifa and Scarlet atop the Junon Canon. (Hmm... I see a pattern of subconcious imagery beginning to emerge, here.) How about Red XIII comically walking on both legs on a rocking boat to the accompaniment of flat, synthesized tuba music? Or the random tactical defense of Fort Condor minigame? Or the bizarre decision to mourn Aerith's death with a snowboarding race? Or all the run-ins with the TURKS?
None of that stuff would fly in a more realistic-looking game. The drawback to more visual realism is that you expect characters to behave more, well, realistically. FFVII's squatty Popeye people could get away with all sorts of random behavior, because they were only a step removed from the simple midget sprites of FFVI. Give them realistic proportions and detailed facial expressions and suddenly you'll find that the idea of a talking robot cat on a giant stuffed moogle is a bit too far beyond the pale to really work. Heck, Square's really pushing it with FFXIII's Sazh, and he's just a guy with a baby bird in a his afro.
You know how people bellyache about the laughing scene in FFX? That would be nothing compared to what they'd say about a realistically-rendered Honeybee Manor. Yet without that undercurrent of anime-inspired surrealism, FFVII would be a dreary, self-serious game -- a lot like Advent Children, really -- and half of what made it so memorable to begin with would be lost in the march to someone's myopic definition of progress.