I think asking what people would expect technically from a FF7 remake on PS3/360 (PC?) is a very interesting question.
I mean think about this from SE's perspective: would they do an element-by-element copy in order to please the fans, or just take the key points story and character-wise and fold it into new structure that fits with their current tech?
Which would be the better business decision, based on production cost versus anticipated return?
For example, would they have an expansive overworld plus towns and dungeons, or go for the more tunnel-like structure of FFX/XIII?
Would they go for a different style of battle-system? What's the key appeal? Is it the turn based style and its summon system, or does it just need to involve materia?
Would all the mini-games get cut - Chocobo breeding/racing, racing sections, Fort Condor, submarine battles, shooting coasters...
I really don't know which way they'd go. To be honest I'd hope they'd be as faithful to the original as possible, but I suspect they'd probably pin down key story points, characters, and go for a new retelling aimed at this generation's mass-market.
That I think is where this fierce argument about cost is coming from. The tech and financial investment in doing a point by point remake of FFVII with FFXIII quality visuals all-round, versus a new interpretation in the "modern" style is very different.