No, the original makers of Xenoears got *fired* from Square on account of budget cutbacks (Thank you, Spirits Within) and the fact that Chrono Cross bombed (Kind of like John Romero and his baby Daikatana. Got him fired for incompetence.) Yes, Xeno and Chrono were mostly the same development team. They formed there own company, Monolith, and Square wouldn't sell the Chrono series rights, obviously, but they would sell the Xeno- rights, as Xenogears never really made them a lot of money. At least, that's how I've come to understand the story. I will admit that there is a chance I'm wrong. Either way, it is true that from the very beginingg Tetsuya Takahashi admited that because of assertions from Square, Xenogears was not the game he wanted it to be, but that really isn't the reason they left square. This is all possibly a reason that the game Chrono Break was cancelled, losing the development team.
And personally, I have a hard time thinking of FF7 as an unfinished game. Things like Xenogears, yeah, I'll buy it. Not a main series FF. That's the Squeenix cash crop, always has been. I honestly think they would delay a game for a year before they would let it out unfinished, but that's just me.
-Contra