First off, I apologize for the length of this message.
tldr; I want to help, MY proposed image example will be at the end.
SaintBahamut, I sure hope you're still around, cause I'd really like to work together on this if you're willing. Like you, I also decided to play this game recently again and was pleasantly surprised to see that mods existed for it (I only ever played it on playstation before, but purchased it recently on steam). And just like you, I was pretty discouraged with the backgrounds among a few other things, but at the moment, mostly the backgrounds. I'm no artist or graphic designer, but I do play with GIMP quite a bit for fun, rebuilding images from scratch without using the original in the final product. I also decided to begin a project to redo these backgrounds as well, but have only been working on this now for a couple of days. It took me about a day to figure out how to extract the backgrounds and the crazy but rather ingenious process required to actually mod the textures due to the efforts of Tonberry (forgot the original designer's name), but two thumbs up for his determination on getting that accomplished.
I certainly won't claim to be very familiar with this entire process yet, so I'm going to explain things as I see it just in case I'm mistaken.
Currently, there are two major mods for textures as far as I'm aware (Eden and AngelWing), I played the game up until just before the part when you first fight Seifer and Edea so far with the AngelWing textures, but only just installed the Eden textures. As far as I understand it, Eden is apparently better, but the hashes are messed up so people just install Eden and use the hashes from AngelWing. I haven't begun playing again to really see what kind of change this has made, but apparently its what people are doing. From what I can tell (and am guessing) both of these mods basically just applied Waifu2 on all the images, I'm guessing Eden did a better job of it and/or also has some other custom edits involved.
Given the images I saw you post, I took one of the ones I thought people probably weren't liking, but also see the potential as to why you've posted this. I don't really understand what you're doing with your images entirely, but there is certainly more detail there than Waifu2 is providing. So I decided to play with one of your images using the process I've been using and I'd like to see if you also think what I'm suggesting has potential.
Before I go further I'll tell you a little about myself and what I've noticed so far from this post. For starters, the background images you're using aren't accurate, and I'll explain that more in a bit, but I promise you won't like what I have to say. I'm currently an unemployed programmer, have been using computers heavily for well over 30 years now, so I'm not a newb by any means, but I am clearly new to modding FFVIII. I have no official graphical design or artist training, but consider myself pretty good at it as far as a hobbyist is concerned despite my lack of training with virtually no artistic skill. So for me, this is a 'fun hobby', I don't claim to be an expert at this.
With that said, from what I've seen so far, I can tell you this: Altering the backgrounds for this game isn't a simple matter of pulling the textures out of the game and running a filter on them. If you haven't gotten a good look at them yet, when you do, you will soon realize that you actually have to 'build' some of these backgrounds using the textures provided, and some of them actually have 2 or more actual backgrounds that need to created and altered. This is due to the animation effects that happen in the game. An example of what I'm talking about is in the archive that was sent to you with the backgrounds. Some of those backgrounds have a map slapped in the center of the screen and clearly can't be used, and that's just one example, they get much trickier than that.
Now having said that, I'm well aware that we would need to build these backgrounds and am willing to do this, I will post an example of one of these images that I've already done as well, I still don't have any clue how many of these backgrounds need to be generated (I'm still extracting the files myself with Unmass, I really wish there was a better process for this, but nothing I've tried so far works, I have downloaded that Deling program posted up above but received the same error you did. I'm sure this would be rather simple to fix, but I'm almost done extracting them with Unmass at this point, so don't see the point in trying to solve another solution that isn't a simple download/install/click and be done with it process).
Okay, okay, enough babbling, I'll now explain/demonstrate how I think I can help you with a little 'how I got here' to begin with.
So the original game's textures are something like 320x200'ish or whatever. Tonberry wants us to enlarge them four times bigger making the average image approx 1280x896, some of the images have large widths, but are always 896 pixels tall as far as I can tell so far. The original graphics for this game are quite nice at the original resolution, the trick is getting them bigger with so little to work with however.
Waifu2 will produce an image like:
Here is your image you posted:
This is a 'current' example of what I planned on doing with my backgrounds using this same image. Personally, I think this is much better than the Waifu2 produced image on it's own, but preference varies. This isn't what I'm suggesting at this time, but what I'm currently going with.
After seeing your image and the detail on it, I decided to run it thru the process I'm using (basically a bunch of filters and layers), hoping that it would produce a better image despite all the noise some of your images were producing, but the results weren't as expected, and certainly wouldn't want to use this either.
As someone suggested previous (sorry, don't remember your name), but I did try combining your image with a Waifu2 layer. It looks better, but overall not by much, so I decided to join your image I made with my image, both run through the filtering/layering process I've been using:
Personally, I think this looks pretty damn good. It adds the details that your images are clearly providing but Waifu2 is absolutely lacking, plus the filtering that I like with my own version.
Each image has to be taken with a grain of salt. This image isn't the best, but it's not bad and with a little effort I can come up with all kinds of variations on how to make this look differently, so there's no need to insist on keeping with the process I'm currently using. I honestly wouldn't be surprised if after a time I came up with a much better process and wanted to just redo all the images, but for now, I think this looks pretty awesome considering it was designed from a 400x224 image.
Take into account that each image can have some TLC applied, in this example, I didn't really like the sky much, but preferred the sky in the Waifu2 image much more, so I masked it into the image, which required some 'manual' work, but it wasn't hard and literally only took a couple of minutes. THIS is the final image I want you to see and consider. There's room to grow here, but I think this looks great (well, for someone who isn't an artist and compared to the Waifu2 image most of us are currently using anyway).
So after all this nonsense, what am I suggesting? I like your images, I want them. From what I understand you're using some commercial filter that I don't have, at the very least, I would love to hear what it is and how you're using it. If you're interested I'd like to discuss this further on Discord or something, create a mega account we can use to combine our efforts, build all the screens we can, and if successful simply provide it as a texture package.
Initially, the hard part as far as I can tell so far is figuring out how to generate all the proper images, which isn't impossible but isn't super easy either. Once we have those, I don't know what you need to do to the images, but I'd like a copy of every image so I can edit them as well. Currently, I'm manually applying the filters and layers, but once a process is decided on, I can turn that entire process into it's own 'filter' in GIMP with a little effort, but even if there's problems with that and I have to do them all by hand, I'm willing to do that, or would at least love to try.
Now I'm gonna make you mad though, but feel it needs to be said. Here is an example of the original game using AngelWing:
This is a pretty complicated background. For one, it's a duplicate (it's during the time when you're about to confront Seifer and Edea for the first time), I haven't verified it yet, but there is another background in the data files for this area and it has a moon and the lights are brighter, I'm assuming it's for any other time other than this moment in the game. See all those people there? They all have images for them as well, and they're really nasty, and I'm guessing there is a lot of this that needs to be fixed up. They've been clearly cleaned up I think, but not by much, there isn't much to go on, which is a huge problem as far as making this game look 'complete'.
I rebuilt this background as well, I'll show you what will happen with it, it looks good I think for the most part, but I would go back and darken the image a bit and/or remove some of the filtering I applied for some of the areas (the bushes mostly, maybe the sidewalks).
There are three 'kinds' of textures here for the npc's standing around, some are horribly blurry, that was due to lazyness on my part, I modified the background and simply ran the rest of the images thru a simple resize in GIMP (didn't even use Waifu2, it takes a while), they're obvious, at the very least, we can make them look like they did in AngelWing though. Look at Squal and Irvine though, those characters are done really well (much better than I can do). I also ran one of those images thru my filter though which you can see on the guards and the two people in the lower left corner the best. IMO, this looks better than what was done by AngelWing, but they still look absolutely horrible now with an updated background.
I don't really have much of a point with these last two images, except that once this can of worms is opened (redoing the backgrounds), all those little details (sprites/animations) in the game really begin to stand out. I suppose the point I'm making here is that doing the backgrounds is only a step, maybe it's all we'll do if you're willing, but those other details will also have to be looked at and will drive people nuts (I may even make an attempt at actually redrawing them myself afterwards) just so all the graphics look and feel the same in the game, might even have to degrade the images of the characters like squal a bit just to make them match the rest of the game.
Anyways, this is a really long message. So I'll stop for now and hope to hear from you in some way or any feedback from anyone would be cool even. Even if SaintBahamut doesn't want to work with me on this, I'm going to continue this myself either way, and with a little time and effort, who knows what I'll come up with. But as it stands, I would really like to use SaintBahamut's images as well, I just think they look much better combined with mine.