If FFVII retained its graphical quality and art direction, and FFVIII also retained its graphical quality, I think it would be inevitable that FFVIII would be considered a landmark event.
A lot of FFVII's appeal was the whole FMV/Pre-rendered cut-scenes and environments thing it had going for it from a technology perspective. We just hadn't seen anything like that on a console at that time.
I think if you had a completely ignorant audience that knew nothing about FFVIII and were going from the incredible promise of FFVI straight into the CG opening of FFVIII with that choir, those graphics and that cinematic direction, the sheer technology virtuosity of the game would probably overwhelm many gamers right from the get-go on sheer "wow factor" alone.
If FFVII came afterwards, people would obviously argue about whether it had a better story. But FFVII's place in gaming history is as much about being in the right time at the right place as it is about the quality of the story, or the depth of its RPG systems and mechanics. FFVIII would drop jaws and blind many people to its mechanical or design problems simply by being so unlike anything else available at the time.