In theory, that would be the ideal solution, but IIRC Final Fantasy VII cutscenes used a video codec that effectively no longer exists. Windows Movie Maker may or may not be able to decode it, and even if you can, chances are you can't reencode it using the same codec. If they're using directshow, that won't be a problem, but if FFVII has it's video decoder built in, you can't alter the videos and make working replacements.
Plus there's no way to reencode the video without losing quality, although you could theoretically rip out the audio stream and then reattach it.
This could be possible, and if it is, it could make life way easier.