It's obvious now that Square Enix will never, ever remake Final Fantasy VII for fear of... I dunno... diluting the property or some stupid nonsense. In any case, the company is way too busy working on that "Fabula Nova Crystallis" mish-mash to be bothered doing something that fans would actually want. So once again, it's up to the fans themselves to do what the big dogs won't.
For the last six months, Jamie Colliver has been tooling around with LittleBigPlanet 2's creation system to produce a unique side-scrolling take on the Final Fantasy VII tale. All the major plot developments and dialog are recreated across 20 levels, each which can take half an hour or more to complete. Obviously, Jamie used the FFVII Sackboys released last year, but everything else was rebuilt using the available tools. He even used Creatinators to approximate Materia magic!
Currently on his YouTube page, Jamie has gameplay videos that cover the Bombing Mission through the Temple of the Ancients, and I'm sure he'll upload more footage in time. It would have been cool had he been able to create a turn-based battle system or at least make battles a lot more dynamic than "pop the bulbs on the monster's body," but it's still an impressive endeavor nonetheless.
A fan's retelling of Final Fantasy VII done with LittleBigPlanet 2 [PlayStation Universe via NeoGAF]