Not worth it in the long run.
...except for making the in-game screenshots I take look better so I can impress my FF7PSX friends.

I agree with the rendered backgrounds, but think of the battle scenes, where everything happens in a real 3d area.
I haven't worked much with the battle scenes, but the way I understand them is that just about every one is just a simple 3D cube with textures slapped on the walls that make the environment *look* more 3D (even though it's not, just the walls are.)
My point? Just a nitpick, really, I guess: I'd think Higher-res would help the battle models, but not the scenes themselves.
and a mini-game slowdown patch... The game needs to be able to run before you can improve the quality of the graphics or music.
Well, in theory, improving the resolution would probably slow the game down somewhat.
I have a feeling that Eidos would have released this with at least 800x600 resolution if they could have without a lot of extra work.
I doubt it. Eidos was just the publisher and didn't really do any of the actual porting. The team of Square programmers who ported it (who were not the original FF7 team) cared very little about there project and were given a very small amount of time to get it working. They actually considered modifying the battle models because they were too "high-res" (a high-level machine back then was a Pentium 200.)
- You should be able to get the backgrounds to stretch with filters so they don't look so blocky.
I agree...Getting somebody who can write an Eagle filter or whatever would probably be the best way to solve the background problem on FF7PC as well.
More cons with FF7PSX:
- The notoriously bad translation is actually worse than FF7PC's because the PC translators cleaned things up a little bit. On the PSX, you're back to Aeris saying, "This guy are sick."
- More limited saves.
- It's not as easy to edit the game.
- For me, at least, every emulator I've tried doesn't display FF7's menus (makes battles very hard.) Of course, that was over a year ago. =P Hopefully that's not a problem anymore.
-Srethron