Many compare The Last Story to being a sorta "spiritual FF". There are aspects I can see there, but others in gameplay and such that aren't as refined. From what I recall, Sakaguchi had the idea for Lost Odyssey back while he was with Square. I could only imagine, him making it into a number installment of the FF series it would've come out similar, but different. The look, totally would be different (probably would be Nomura characters, Amano illustrations, Minaba or Kamikokuryo art direction. Uematsu would still be the composer, but we'd have Square Enix folk refining the gameplay up to FF par). It's a what if scenario, at most. Nothing to lose sleep over, but still a wonderful dream.
Sometimes I feel like I'm an insane person in a sane world wanting this series to move forward over living in the past or prolonging the present. Sometimes I feel like the only one that was content with the way OG FFVII ended, not wanting anything more of that world and left it completely satisfied and happy.
As a former Square employee, it's quite obvious that Sakaguchi purposely emphasizes the FF callbacks in the Mistwalker games. It's an attempt at recapturing the old glory and also winking at the audience in a "Hey 'member this?" fashion. Meanwhile the people at SE are free to try new things in FF and to let the past die because they already have the brand power for themselves. That's why some people feel Mistwalker games are more faithful to FF than the modern FFs are.
You can see that with Masato Kato too. Ever since he left Square his stories have been nothing but callbacks to Chrono Trigger and Chrono Cross in a rather sad attempt at staying relevant. It culminated recently in Another Eden where a Frog lookalike literally named Cyrus has an attack called Nirvana Slash (which was the Japanese name of the Nirvana Strike attack used by Cyrus in Chrono Trigger).