That would be so cool! Would we be able to play in a psp? But the size with all those upscaled textures would be vast..
No, it would still require Windows, and generally behave like an installed copy of the game. In computer software, "Portable" does not refer to running on portable systems, but being able to move from one machine to another and keep your data intact. For example, I could play the game from a USB flash drive on my home PC, save my game, bring my flash drive to work and play there, with my save intact, get fired for gaming at work, and then go home and keep playing, all from the flash drive, without leaving behind any remnants or evidence it was ever there.
Of course, the method I have in mind isn't truly a portable application, it just fakes it. Essentially what it would do is install the game's FILES to the flash drive on initial setup, and then run the game with a launcher that would install all the needed registry settings and whatnot, and then revert them when you're done playing. It's a bit of a hefty workaround, but the user experience should be pretty much the same as a program which was actually DESIGNED to be portable. In fact, most of what I have in mind is not all that different from Cameyo that DLPB already posted, except that it would be specifically tailored to FF7PC, retain moddability, and give the user a bit more control if they want it.