UPDATE:I got this mod working.  You can download it here:
http://www.mediafire.com/?o8x72f8p8pyo9ig-------
I'm trying to remove the giant "You Are Here" hand indicator from the [ASSIST] (Select button on the playstation) from the PC version.

I believe I found the files that need to be changed and tried to mod them.  I was able to remove the hand, but the triangle indicators become the wrong color.  I'm guessing one of the tools that I'm using is not outputting the right format and it's screwing up the color.

If it makes a difference, I'm using the 2012 re-release of FF7.  Here are the steps I did:
- Used ulgpGUI v0.5 to extract the tex files from Final Fantasy VII\data\field\flevel.lgp
 
A note: The 
wiki said flevel is the only one used, so fflevel, gflevel, sflevel were unchanged. Not sure what they do since the textures seemed to be the same in all of them.
- Used Biturn 0.87 beta 4 (linked from the wiki) to convert hand.tex and hand_1.tex to BMP
 - Used photoshop to black out the hand in hand.bmp and hand_1.bmp
 
Photoshop seemed to change the header file even when I made no changes.
42 4D 36 0C 00 00 00 00 00 00 36 04 00 00 28 00 00 00 80 00 00 00 10 00 00 00 01 00 08 00 00 00 00 00 80 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 0042 4D 38 0C 00 00 00 00 00 00 36 04 00 00 28 00 00 00 80 00 00 00 10 00 00 00 01 00 08 00 00 00 00 00 02 08 00 00 12 0B 00 00 12 0B 00 00 00 00 00 00 00 00 00 00 00 00 00 00So I used a hexeditor to change the header of my modified BMP files to match the exported originals from Biturn.
I was missing comdlg32.ocx since I'm using Windows 7 64bit, so I downloaded it from a site and copied it to Windows\SysWOW64 and registered it.  I kept the "Color 0 as transparent" option checked in the program.
- Copied my modified tex files to the dumped files from ulgpGUI.  Switched it to the encode mode and made my modified flevel.lgp
 - Started the game and I get the 2nd picture of my post
 
Can anyone help me with this problem?  It seems like there could be an easier way to do this without going through the 4 different programs to get it, but I just started reading this site a few days ago and I don't know which tools are the best to use yet.
I also tried using 
CheatEngine to see which values are changed when I press [ASSIST].  I narrowed it down to 4 memory addresses and tried to monitor which assembly instructions were modifying them, but it was starting to get really complicated trying to go through the assembly which was why I tried just changing the texture instead.  If there was an instruction I could change to achieve the same effect, I would be fine with that method too.
I tried saving the modified image as a GIF instead of BMP before converting back to a tex file and I got the exact same file, so I don't think modifying the header is the reason for the wrong color.
I think the problem is that the BMPs that I get from Biturn are the same color as what I am getting in-game.  The game is converting the purple, blue, and gray into the red color, but not for the modified image that I made.  I think it could be related to 
this other thread.  The picture below is a 400% larger and cropped version of hand_1.bmp that I am getting from Biturn.
