Actually, what you're talking about is pretty much cake compared to the type of stuff normally being attempted around here.
FF7PC's current font sets are in cr_us.lgp (in .TEX format.) It's a fairly small file, and *is* put on the hard drive with the Standard Install. There are two sets, one for the full screen modes, and the other for quarterscreen.
Which of course means, in theory, all you have to do is extract them as .BMPs with LGP Tools; scale them appropriately in a graphics prog; convert back to .TEX with TexTool; reinsert your replacements, make an LGP patch; and distribute.
...if only it were that simple. From my experience, you're going to run into trouble, though, changing the size. FF7 doesn't like it when you modify the size (or palette, as Ficedula correctly points out in TexTool's readme.) This leads me to believe that the size definitions are stored/called elsewhere, but I'm not sure how or where.
My guess is that this is where another DirectX layer *might* be helpful. Obviously, keep in mind, I'm quite a buffoon when it comes to knowing about how texture rendering can work--this is merely theorycraft.
Assuming you could get around this one problem, keep in mind you also will have to repeat this process with FF7's other textures (various splash screens--i.e. "Game Over"--, field model eyes, portraits, menu images--including battle slot reels--, not to mention all the various textures used in 6 minigames and the World Map, and magic.lgp) I can't remember if battle.lgp has any textures, but I'm assuming it does. Not all of these files are copied to the hard drive with a Standard Install.
All in all, it's still worth doing, and not *too* much work for someone who doesn't mind it. To be honest, I've already done some of it. =D
Backgrounds, as already stated, you pretty much have to wait on because we need to get rid of the black dots and other display problems.
Assuming that that font set actually does exist in a useful state
IIRC, it doesn't. Although if it does, it seems unlikely you'd see it until after the whole Remake is finished.
Anyway, I think a smarter option is to just do an effects filter of some kind. It works for emulation, and it can work for us. All we have to is either:
1) Find someone with the know-how who is willing to program one for FF7PC.
or
2) Do it ourselves. (DirectX layer time again?) This makes the most sense to me, because the
source for 2xsai (which was based off of the
discontinued Eagle library), both of which are used in various SNES emulators (like ZSNES) is GNU and freely available. In case you're wondering, it's C, but compiled as C++.
it wont make the blocky backrounds or skinnyelbows/hugeblockhands go away.
If I may, I'd like to direct you to \char.lgp\doga.hrc:
It's Tifa's hand, in higher detail. If somebody *really* wanted to, they could use it to create a hand model template. Then, they'd just have to replace every field skeleton's hands with their new model (which would involves lots of find/replace as well as modifying copies to match coloration and other defining characteristics of different model's hands.)