The oft-rumored Final Fantasy VII remake is probably still just a pipedream, unless Square Enix has a lot of poor spellers in its PR team.
A rumor suggesting that Square Enix was planning to remake Final Fantasy VII for the NGP would seem to be nothing more than an elaborate joke. The rumor stemmed from a "leaked" email, which was supposedly sent by the Square Enix PR team, which suggested that the company was looking for translators to localize the game for different regions.
According to the email, Square Enix was remaking and improving the much-loved RPG, turning it into something called "Final Fantasy VII - Enhanced Version." This new version would apparently have a number of new features including a revamped combat system similar to the one seen in FFXII, new visuals and remastered sound, and an "endless world" for players to explore.
Unfortunately, while whoever put the email together went to great lengths to make it look official, some odd phrasing and a number of spelling mistakes raise some pretty significant questions about the email's authenticity. What's more, a Square Enix representative indicated to VG247 that the information contained in the email was incorrect. While that's not an official refutation of the email's claims, it does suggest that it's not an official document. You can read the email for yourself here.
There's been no shortage of rumors about Final Fantasy VII remakes ever since Square Enix recreated the opening cut scene from the game as a tech demo for the PS3. Square Enix has repeatedly denied that it planned to update the game, although it has never completely ruled out the possibility.