Actually, I don't think you'd be able to fit the code onto 128mb, even with FMV removed. Unless they turned it FF3 ish, but what would be the point in that?
The data for the entirety of FFVII was on every disc; the only serious difference was which FMVs it contained. Don't believe me? Go near the end of the game, and swap your disc 3 out with your disc 1, and be AMAZED that the backgrounds, text, music, and -everything- still loads, and that it only acts up when you get to an FMV event.
Scale the pre-rendered backgrounds down to DS resolution, use -more- efficient image compression that lowers size -and- improves quality (or allows for higher quality, rather), and hell, improve the textures for the character models. Betcha anything that it easily fits on a 128 MB cart, if not a 64 MB.