The brick wall that most people want to get around for FF8 is the model, texture, and animation format. We understand a lot of it, but replacing models and textures with better ones is currently impossible (obviously, solving this problem opens the door to boatloads of potential graphics mods, and a lot of people here really want to get Magochocobo's textures into the game).
As I understand it (I haven't gotten that much into the model or texture formats of FF8), the problem is that models have texture coordinates that are pixel based, rather than ratio based, so you can only replace textures with new textures of identical size, or you get ugly texture mapping results.
Someone around here was messing with texture coordinates by hand with minimal success (it was impressive nonetheless).