I think Petros makes a lot of good points here. Mostly that the FF series has essentially shot it's load, and can't offer anything really new or groundbreaking without completely changing what it is.

The difference between FF and Mario is that yes, while you're always fighting Bowser, you're fighting him in totally new and unique ways, on different worlds, with different means of getting from point A to point B. People would get sick and tired if every Mario was the same exact game, with no new levels or powerups, or enemies. There's no real story to Mario, since all you're doing is fighting Bowser and rescuing the princess.

With FF, you're expecting to be immersed in a world with new and exciting characters, and a rich fulfilling story. When you play FFVII now, you're playing it mostly for nostalgia or for the story of it. It's not offering anything new. The prequels and all of that jazz are just like glitter. Sure they're pretty and shiney, but they don't offer anything new to the actual story of FFVII. They don't make me want to replay it. I feel like even if they were to update it and remake it, you'd still have a beginning and ending that don't make sense when compared to the actual meat of the game.

There's no fathomable way that you could make it into one continuous game, since you'd play through CC for X amount of hours, meet all of these characters, who all die... JUST to justify a single scene that was already taken care of enough through dialogue and a cutscene later in the game. Could you imagine if it were a compilation made for the PS1. It'd be maybe 6 discs, with 2-4 being the original game, and a big red X on disc 1 saying "This has no bearing on discs 2 or 3, but explains a little detail on disc 4."

Why not make a separate game where Cid flies a plane, or maybe something fleshing out Corel for Barret, or maybe a sweatshop sim where you make Cait Sith?