From what I've been reading they're aiming this film mainly at the fans (EDGE had a good interview and preview of it related to this, I might post some of the questions and answers later if you guys are interested), not at the massmarket. While having played FFVII isn't essentiall, you likely will miss out a fair chunk of it if you see the film without having done so.
That's one of the reasons why it's mainly a DVD release (IIRC, there still aren't any real plans for a theatrical release, at least not on a major scale).
Basically, they aren't intent on repeating what happened with Spirits Within. From the previews I read of the special showing (IIRC, there was a special pre-screening of an incomplete version of the film at the Venice film festival. 1up.com (which is a fairly major games website) did a writeup of it which sounds very positive. Personally, I just skimmed it, because it's got LOT's of spoilers (they give you a warni, it'ng before they start though, so that's OK. Basically the first couple of paragraphs and the last paragraph are designated 'safe' :mrgreen
Anyway, if you want to read it ( and remember, THERE ARE SPOILERS, so don't blame me if you read something you didn't want to know until you watched it in person), it's here:
http://www.1up.com/do/previewPage?cId=3134435&did=1
As for me, it's been years since I played FFVII, but I reckon I remember enough to watch the film and get it.