Are you recommending prerendered backgrounds? In theory, this could all be done as a FF7 mod; we've got the tools to do so already. The issue is, designing and rendering backgrounds is most certainly not easy; it takes a lot of time, and sometimes scenes have to go through a lot of revisions in order to look good. Granted, it'd be far easier, at least in some ways, to do something original, because it doesn't have to match up with existing walkmeshes or someone else's artistic vision, but even that would still take a good bit of time to build.
Consider this: the bombing mission portion of FF7 is roughly ten minutes of content (a bit more, since there's a bossfight and an escape through previously-traveled areas), and Team Avalanche hasn't even finished with that yet.
It's not that it couldn't be done, but this community simply doesn't have enough graphics artists with enough free time to take on a project like this and get it done anywhere in the near future, not even a basic demo.