As Akari explained, you can't expect much better graphics from a game that started it's deveolpment in 1994. I'm pretty sure Square could have done some better job with the graphics, but most likely by the time their libraries could support better models it was too late to redo every NPC.
The problem with FF7 isn't that the field models are SD (I like the SD look). The problem is that they are very low poly and nearly untextured. FF8 had certainly higher poly-count, but not much. They were textured though, and that helped a lot.
As for the NPC RP, the models are still mostly untextured, but have a lot more polygons. I'm quiet sure that the PSX wouldn't be able to render such models fluidly, no matter how hard they tried. If you ask for the time needed to redo an NPC... well, I can only talk for myself. It took me from one day of work to more than one week, depending on the model. Then again, I'm much slower than ice_cold513 and stormmedia.
Anyway, it's not fair to use the time any of us can spend reworking a field model to aproximate the time Square empolies would need to do the same. We aren't professionals and have no experience modeling (hell, I don't even know modeling actually). We don't get paid either.
If we talk about the PC port... well, let's face it. Square didn't even add the much needed higher resolution backgrounds. Not even a crappy bilinear filter. Neither did they add 32/24bits color depth, nor better movies (in fact, they are even worse). It's amazing they were kind enough to throw in a 640x480 mode and hardware acceleration. No, they certainly didn't put much effort in this port.