Lol, that would be super funny indeed! Imagine the faces of certain SE staff if such a mod actually manages to become popular, lol! Unlikely, I know, but a hilarious thought nonetheless.
About the character model looks: I've never cared about the details of those super-realistic character models in the various compilation games, but I remember various design choices by Square Enix that just left me shaking my head. When I first saw the Advent Children Sephiroth, I wondered for a moment if that was really him, looking so very different from his in-game counterpart (same with some other AC characters as well). Barret's new sun glasses were another... awkward choice to me, to say the least. Didn't the original Barret look baddass enough already? So why was this necessary? It doesn't add anything whatsoever to his character, and only serves to enhance that pseudo-coolness-factor that Square Enix seems to be so fond of.
And now this new Jessie... makeover? I'm completely with mr_nygren on this one, this woman looks like a completely different person now. If I were to just look at that picture of her, and without knowledge of the rest of the trailer, I'd never be able to identify her as Jessie...
I do agree with DLPB:s answer to my text mostly.
But chibi-models? No, they were great for their time but i want something new. But i would prefer HD-models that tries to look like the PRB/battle/FMV-models in HD. Or like in the 2015 trailer were they at least had a more anime-styled vibe. If they are too real-life like then FF7 will loose a part of it's charm. The unique style of Final fantasy VII made a difference in why it stood out. By making it in the same style as other Final Fantasy games it will no longer stand out from the others.
Edit: I answered this post to fast before reading everything.
Yes, i 100% agree that the characters looked a lot better in the original FMV-movies than in Advent Children. They should have kept the original style. Even if they made it realistic they should not have changed the clothes, the pants, the weapons etc - because the characters were already bad-ass in the original game. If they weren't we wouldn't have liked it. The style on the contrary was one of the most fascinating and important aspects of the game. Every character with few exceptions looked really cool! But Sephiroth in particular made me obsessive for a few years about him and the game - mostly because of him.
His looks were so bad-ass that i wanted to be him and play as him really badly. President Rufus wasn't far behind. All i am hinting at is that the new style of Advent Children was underwhelming compared to the original FMV's. And of course Tifa went from a 10 to a 6 - if rating her looks. I think most FF7-fans had a crush on her for a particular reason.
Changing the looks of Sephiroth made him look less cool, and especially his hairstyle looked off in all the modern games - in FF7 it looked perfect. Even the chibi-model of Sephiroth looked more bad-ass than the modern representations - especially in the "Temple of the Ancients". It just had a much better hairstyle and cold big eyes. Barret looked way better in the original, he became smaller and less huge in everything that followed.
About Jessie, i am happy we are two thinking like this - She looks like she could be any Japanese woman now. While the original had a much more unique look.