Re-releasing previously published content IS a violation of copyright laws, btw, even if someone else did all the work and are putting it out for free. However, game companies are very lenient towards modding communities. The only legal quibbles i've heard of were people making Thief fanmissiosn using the Thief2 engine, because if peopel wanted to play Thief 1, all they'd ahve to do is download these free missions, and even though T1 isn't a profit making game anymore, it's still something eidos could sue over.
Likewies, here we have FF7, which Square is still milking (and, sadly, rumors of a remake may just spur Square to make one, like they have with the complation), and.. yeah. I figure, as long as you stick with the first reactor, you won't have a problem.
On another note, I'd caution you against using models which are too high-poly. I'm sure you get great frames when things are sitting, untextured, by themselves in a blank space in 3dmax, but put several ai/objects and the background, all textured, on screen, and even the highest-end video card will start crying. Just sayin...
