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"We have been an update to the information on the Final Fantasy Info. If there will be a "new" PS3 version of Final Fantasy 7, it "WILL NOT" be a remake. There is likely to be a spin-off or a sequel to this popular game and exclusive to the PS3. I extremely apologise about getting some of your hopes up about the FF7 remake."
http://playstationlifestyle.net/2008/07/23/huge-apologies-and-regret-from-whoelse/
It'll be a spin-off if anything, not a remake.
We also already know that S-E have a "huge" announcement schedualed for The SquareEnix Party
I could definitely see how it'd help Microsoft, but I don't think it would hurt Sony.
Although StabWound made a point though, FF7 is a Sony exclusive, atm, so it might not be put under the XBLA, then again if Sony continues to not keep games, and classics, exclusive then Sony is going to fall this generation.
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Even if Sony didn't own the rights to FFVII, I'd be extremely surprised if it was released on the Marketplace and not on the PSN, so it's not as though Sony fans will be missing out on anything.
owait...
I'd love to run around swinging Cloud's huge sword.
But, I'd prefer it not be like the Final Fantasy 12...