My post will be kind of harsh, but realistic. Assuming it's a fan project it's already doomed in the moment you posted it. Why? Couse it's just an idea and not even deeply thought, ideas die fast if people doesn't get paid for it or if they don't join seeing that it have arms and legs and is already started. Sure if you ever worked about any commercial product you can think somebody that just know a little bit about everything can be project leader, can start it or whatever. Fanmade stuff is light years far from that. If you don't show a skill in doing something yourself nobody will really give part of his life to make your dreams/visions come true. You don't give any work from self other than spending some time on google in excitement after you probably got excited with similar project with the difference it didn't had your dream story/characters etc.
Modding a game is something that's on the edge of legality and all depends how company which have rights to it will look at the project. Idea of a completely new game, on different engine and what's worst based on FFVII isn't even modding anymore and more it hits value of Square brand, and most likely will be instantly considered by them as illegal nevermind protections you could use. There were similar projects when people taken characters/story from one thing and tried to make a remake at other game engine. Just look at Quake3A mod which started as DBZ mod, pretty soon, before even finishing their work, they needed to abandon all DBZ related stuff ending with something completely different.
Using new graphic engine to show copyrighted characters is a NO-NO as it makes the company loosing money, shows people that they can wait for freeware instead of buying new original creations of company which owns copyright and even if you could make it somehow legal, they would put you down one way or another. Just going to the court with it would be nothing for them if they could gain by stopping you, your private budget would pretty much die taking off the project very fast soo think over it a few times before you get some more briliant ideas. In other words there are two things you must always consider whose toes you wanna stand on and how much you weight. In this case althrough company is big we can assume owners are japanese which makes their feet very small leaving those toes very sensitive and pretty much anything big enough will be a pain they'll kick off and make sure it doesn't return.
You should surely read at least once this sticky topic:
http://forums.qhimm.com/index.php?topic=8759.0 If you think it's not your case couse your idea is something else, read again, and again untill you understand Halkun's words from this topic trully and understand that this idea shouldn't leave your head or at least leave it in other place as such project here would be risky for whole FFVII modding community.
Don't get me wrong idea isn't stupid, but it's far from briliant as most people here thought about something like that at least once, but even optimist wouldn't start anything alike looking at some of examples Square shown in the past. If you really want/must learn it the hard way, feel free to try, just make sure you don't risk this modding community with your ambitions. In other words, I would politely ask you to do it somewhere else. >.>