I see very few possibilities here.
Disc-Switching isn't a huge concern, and it's also one of the ways you can be sure a person is playing a legitimate copy. The first option would be to do what you said you didn't want to do, Rip the CD's to iso files. and find out what point it asks for which CD's in the game, and setup some kind of rigging that auto-mounts.
Or setting as many Disc Drives as you need, mounting them all, and just hotkeying them to turn on and off as you need them.
Pushing all the files into one massive iso is a nice idea,but the names of the discs is what I think FF looks for so it would be messed up.
All-in-all the most stress-free way, is to just iso them and mount. less stress on your PC and less stress on you. just two right clicks and 4 left clicks if you keep a my computer and FF8CD folder open while you play.
What you're describing is playing the games without,or without all of the CD's, which doesn't make the game any better/worse. Maybe if all the game and data could be installed it would be beneficial to run speeds... but really not much of a difference.
In my experience games that were "Altered to install all components to my program files" in comparison to the real game with disc changing, disc changing is the most efficient.