First thing I think people need to realize is that there is a difference between a visually action-packed battle-system, and a mechanically action-packed battle-system.
It's completely possible for a command-based battle-system to look visually action packed, if you for instance have the characters move around automatically throughout the fight, add a multitude of attack-animations etc. whilst still retaining a more old-fashioned command system.
So, with that in mind, I don't think it's useful to project too much into the comments we have so far on the battle-system.
As for what kind of system is better - well, it completely depends on execution and target audience.
Personally, I played, and still play traditional RPGs, in part, for their command systems. I approach these games the same way I approach board-games or chess. That doesn't mean that I don't like action games (one of my fav games is Devil May Cry 3 for instance), but there's two completely different mind-sets going into the two, and two completely different sensations of mastery and what you get out of the experience.
This also doesn't mean that these kinda games aren't immersive. Immersion is not just about whether or not you can imagine yourself being inside a fictional world, but about how invested you are in the game-play in and of itself.
I don't think people would play games with a lot of abstractions, such as card-games (magic the gathering) or table-top RPGs using notepads and dice if they didn't find these mediums immersive.
To say for instance, that command-based battle systems are outdated, or not immersive, is simply flat out wrong. They're not. They're simply not trying to be what they're not (action games), and they're not aimed at people who look for that kind of experience.
That being said, there are some issues with action systems is general in relation to what happens when you attempt to implement them in classical RPGs, and that has to do with what RPGs generally attempt to do from a story perspective - which is to tell a story about several characters traveling together, and by extension, giving the player the responsibility for a cast of characters through game-play.
Command battle systems are perfectly equipped to deal with this, because you're generally given the option to micro-manage the entire party in real time (not in the general sense of "real time", but in the sense that you get to pick each move in between each enemy move with no lost time in between).
This means that each respective character is the player character.
They're all an extension of the player's will at all times, capable of carrying their own weight as the player would, if he were to control just one of them at the time, without the other characters present.
In action games though, because everything is happening in real time in the conventional sense, you are not given the same liberty.
Even if the game has some sort of adjustable A.I system, the player now does not have the same amount of control over his party, and the battles are very often reduced to a battle of making sure your other party members don't get in your way, or don't die off on their own while you're attempting to do something else.
In no FF game is this more apparent than FF Type-0, where your other party members die all the time running around being largely useless except as distractions to pull enemy attention away from the player, or serving as back-ups for when the player-controlled character dies.
It really isn't apparent to me what they add to the combat apart from this and diversity of moves, which couldn't just as easily have been done by simply not having them in combat at all and giving the player more HP and MP, and moves to make up for their absence.
Action games work really well when you only have one character to worry about, but they get gradually more frustrating and difficult for all the wrong reasons, the more non/semi-controllable characters you add to the fray.
Some games try to alleviate this by creating a stand-still order option, where time ceases to move and the character can micro-manage the A.I responses, but this just proves the efficiency and usefulness of command systems to begin with - after all, you're just supplement your action system with a command system to make up for the inherent issues with multi-character action systems, which begs the question why you A.) didn't just go for a command system to begin with, or B.) just went for a single-character action system.
The answer to that question however, is way to often, because the developers want to cater to the widest possible player demographic - action and RPG fans alike, and people with a mixed interest.
That can be a good thing, if you manage to make a working system pleasing both groups. Often though, you just get trapped in a sub-optimal butchering of both genres.
The action system gets watered down, and bogged down by RPG mechanics that devalue reliance on pure skill which is usually the driving factor for action game enthusiasts, yet these games often demand just enough skill to frustrate RPG players who'd rather take a more off-hand strategic approach to game-play rather than relying on twitch mechanics and long combo-inputs.
Strategy in terms of understanding the theory of the combat also gets watered down in favor of being able to run around and dodge, reading attack patterns, and so forth.
More often than not, it is ultimately unsatisfying to both camps, and only really appeal to the middle-ground holders who're not really invested in either play-style.
People who wouldn't approach games like Chess or table-top RPGs with a ten-foot long pole because they don't see fun in abstract theoretical games, yet don't have the aptitude for "difficult" action games.
You get the cookie-cutter, button-masher which at the same time allows players to grind for levels so they can cut their way through the game without giving any thought to mastering mechanics.
That's essentially what the FFXV battle system is from my perspective having played Episode Duscae, and it's what Type-0's battle system was as well.
Both of them lack the depth of a good action game, and a good RPG, and so they're in the "jack of all trades, master of non"-camp.
That's not good enough for a remake of 7 to my mind.
I'm not saying they should definitely go either way - but they should definitely pick one and stick with it, instead of going for some half-assed hybrid system that does neither justice.
I do lean towards a command based system though, since it is the superior option for retaining most of the original game's content and feel.
The fact of the matter is that FF7's world was designed without any thought given to the battle-system (not saying that the battle system was thoughtlessly designed, just that it was designed as an abstraction apart from the world-building), because the battle system took you to a separate screen entirely.
This allowed the designers to be creative with the enemies, the skills etc. without limitations.
A real-time, non-transitional battle-system on the other hand, requires you to meticulously design the environments and the enemies around the battle system.
You can't have enemies like Hellhouse popping up in narrow corridors, or enemies with huge AoE energy beam attacks in small rooms that don't allow the player to dodge etc.
So, to make a non-transitional real-time battle-system for the remake will necessitate either A.) lots of redesigns of enemies and skills, B.) redesign of where encounters happen and/or C.) redesigns on entire areas, iconic to the game or not.
Most likely we would be looking at a combination of all three.
That's risky business.
As a matter of pragmatism a non-transitional action system simply isn't the way to go if they want to shorten development time, retain content, and retain the feeling of the original game.
They might go for it still - but that means that we're looking at a game with a drastically different world and different/reduced enemy types and skills.
That would be a bummer to my mind - regardless of whether you enjoy action systems or command systems.
I don't want to go into a remake that offers less content than its (by the time of release) two decades younger sibling.