The packs are only for performance. It can read folders by default, but this can (highly) increase the start up time of the game depending of how complex the mod is. I prefer the use of the folders to test files, because I do not overwrite anything and doesn't need to care about conflicting files so much and I can easily swap back if I don't like the result. If I like the result I pack and compress the files to an iro mod and speed up the loading time. On top, I'm able to let the user select what he wants to use with a preview image (but even a preview of music is possible) and I can inject files if a certain condition is full filed. The dynamic weapon mod I made for Cloud is a good example of how powerful 7H is. It's also possible to give Tifa the chosen weapon on both hands. There are tons of things possible, because of case sensitive files.
It simply would be great if we could merge all tools together to increase the functionality of 7th Heaven. This doesn't mean 7H is the ultimate tool we need to serve, but it would be easier for the user to use only one tool to mod FF7. Even the use of the gamesconverter seems to be a burden for many. It's also better to have one tool because of the rare man power we have here on Qhimm and I don't like to see work done twice and in the end one is the winner and one has done all his work for nothing. I'm confident that you will create great tool as you always do, but it couldn't hurt to take a look at 7H source code and see if you could improve it.
One last thing and which may makes your way more interesting for Steam user. 7H currently doesn't work with the re-release. And if you can bring the upscaled backgrounds to work with it (it is possible I did it with uMod but it needs a better way to get the hash codes) this may beat 7H entirely.
Whatever you do, 7H can be set to work with any moding tool (more or less it can change non FF7 related files). This was something I ask Iros for to be prepared for future mods.
Sorry Sega for this off topic discussion. But more isn't too say here from my side. It's Dan's decision, if it is good or even better (
) to do so, not my. I only want to point out a few things.