"... and so I close, realizing that perhaps the ending has not yet been written."
It's the Kingdom Hearts team that's working on Versus. The "FFVII team," as I understand it, is divided largely across multiple different projects with a bulk of them working under Nomura (which would, indeed, suggest they're working on Versus). Given that the Versus team is, for all intents and purposes, the Kingdom Hearts team, I sincerely doubt they've made much progress on KH3 beyond maybe early stages of pre-production, most likely limited to Nomura beginning his conception for scenario development.
I'm guessing that some of this "outspread" team is also devoting time to Final Fantasy XIV MMO. Personally, I don't like any game that I have to pay for more than once (unless I accidentally break my copy), and I hate Square for breaking up my collection by puttin XI and XIV online. If they could just release a sub-branch on PSP or DS (like Ragnarok is doing), I'd be a happy little penniless bum-covered-in-trash camper. Because I'd willingly pay any amount of money to get my hands on such a product. Particularly with such, there's the possibility of being able to play as NPCs from the online game. But I'm way off-topic now so...
Eh, I'm one of the people against this idea. Chances are it is an FF7 remake and I probably just have a bad case of nostalgia goggles but I'd like to see FF7 kept as it is, with as much of it's integrity in tact as possible after all the prequels, sequels and spin offs. I'd rather see teams focused on making new, main series Final Fantasies than remaking old ones.
Also I hate Cloud's new design and I just know they're going to use it.