1) I think they could have had more emotion if they made it fmv
Yeah, but it seems you're talking about the characters' emotions, no? I'm saying to keep it a battle has a higher effect on the player's feeling of disbelief and loss.

2) I hated the auto-life...it was what made the battle pointless
Yeah, I agree that the auto-life was annoying. To KNOW that it in actuallity was impossible to lose made it less emotional to me, emphasizing the "this is story; it's meant to happen" aspect of the scene. I would have prefered it to be like the Jenova Life battle in FFVII (in the City of Ancients), where yeah it's possible to lose if you try, but extremely easy to win.
(In the case of the Jenova battle, you are at full health from the start of the battle, and are given an accessory -- Water Ring -- that absorbs all of her attacks. She also has quite a low defense, making all of your attacks hit for big damage. I don't know how similar circumstances could be attained in the Aeon battle, but it wouldn't be to hard to create some. Simply toning down the strength of the aeons' attacks comes to mind.)

3) If they made it fmv the summons could have changed and they could hvae showed the aeons emotions, especially Valefores because it was the first summon
My interpretation of what happened was that Yu Yevon corrupted the aeons, making them WANT to destroy Yuna and Co. So what emotions would they show, besides maybe anger? Also, keeping the aeons insensitive once again heightens the emotion of the player -- it would be much easier to kill them if it was clearer what they were feeling.