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A remake would sell like hot-cakes. It would also receive an insane amount of hatred and criticism, no matter how good the remake actually is. People would buy it just to complain about it. I have absolutely no doubt about that.

The question is, does Square want the money enough that they're willing to take all the hell that goes along with it?

Besides, FF VII had an incoherent story and a main character made out of card-board. How would they get around those things in a way that doesn't leave the nostalgia-blinded screaming? Improve those things and people get angry. Leave them as-is and people get angry. It's a no-win situation--well, except for all the money.