SE Yoichi Wada Has High Hopes for PS3, expects Sony market to take off in 2008

Many tech demos are. If you're testing the hardware, you want to try and stretch it. If you want to see how well it handles an ornate architecture with free-roaming AI characters, you build a scene with all that in. Doubly so if you're intending a public showing.

I don't see any reason to think what was shown here was a WIP for a particular game. It might find it's way into a game, and may be assets they had from elsewhere. I'm pretty sure an interview said it was just a tech demo and nothing was planned. It's certainly not an FF title or FF MMO. At least there's never been any official or unofficial branding of the tech demo as as much by anyone but reporters.

I just redownloaded the MS E3 2005 conference, and Yoichi Wada said(word for word):
Yoichi Wada said:
I'd like to share with you a sneak preview of what we believe the future of video games might look like. We created this real time rendered image taking advantage of Xbox 360's superb graphics power. *crowd applauses as Wada leaves stage*

So while (for me) it looked like an mmo demo, it was nothing more than a tech demo, like many of you have said.
 
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