I think... in this case they're going to have to go with something original. Which simultaneously baffles and concerns me. If it's going to be a Hollywood adaptation then I'm assuming it will go the way of all Hollywood adaptations of foreign movies, where they basically take the setting and make it American. That worked with The Ring because... well, video tapes are (or were lol) a universal concept and it wasn't overly heavy on the Japanese thing, and while Ju-On was closer to it you could still pass it off as Ghost in the Attic Syndrome . I think the main issue that comes from adaptations that fall flat is that they try to pull too far away from the original in "localising" it and lose a lot of the charm (and often logic) of the original, whether due to cultural differences or just plain awful writing, so I'd prefer it if they dropped that altogether and made it American from the start...
The main issue, though, I think is kind of unique to us in that... well, this is a very, very obviously Japanese series, in a way that none of the other things really are. The main symbols of each game are Shinto-style rituals, big abandoned Japanese-style houses and generally all the things they're so proud to talk about "Made in Japan" horror games because of. How would they translate this to a Hollywood movie? First and foremost I'm concerned that the first thing they try to do will be to convert our historically short-ish, meek and traditional Japanese horror-style protagonists into Charlie's Angels style action heroines who run around punching walls just because IT FEELS GOOD. I don't think their target audience would be happy with the general style the developers aim for, or at least used to before the Booby Giraffe Brigade pulled up (no offence to Ruka but this is basically what you are) and that would affect the overall story in all likelihood. What do you do about the setting? You surely can't just gloss over a big Japanese mansion hidden somewhere in the American countryside, can you? It's not easily hidden like a well or something.
So we've not even made it past the intro of the film yet, and already the thing is looking hardly recognisable bar the camera. Which begs the question... what about the camera? Do they dedicate long, long sections to actually playing out the fights? If not, how does the film itself actually progress? If you take out combat, you only have this tiny little smudge of story left behind that really doesn't make much sense alone, and a bunch of weird puzzles. There's only so many times you can take photos of random objects and have puzzles magically solve themselves. If they do keep the camera, do they keep the backstory? Are they willing to break up the action with some - possibly pointless - segments going into the camera's background and precisely where and who it comes from? What about Asou? Even explaining the basics would probably eat up a lot of time. If we lose the camera then we lose every single element tying it to the series as we know it; if they keep it in, they have a LOT of explaining and figuring out to do, unless they play it the way the Japanese movie looks to be doing and basically go "oh, there's this camera, it takes freaky photos and YOU'RE IN IT!" and leave out the combat entirely. So... where do the ghosts come from and how do we deal with them?
Another thing that makes the series what it is is the notes you get everywhere. What do we do? Have the protagonist stop every few steps to read some dead guy's incomprehensible diary? How do you convey that sheer volume of information to the audience without basically turning it into a readalong session? If you strip out the notes, how do you tell the backstory? Gloss over it, or have a Mafuyu-style monologue explaining it all? I don't like the idea of that. They'd have to come up with something good, or we'd end up with some likely very papery and thin characters. Establishing some kind of solid backstory for the villain would be a challenge, too, and that's possibly the most important part. I mean, we do have a villain... right?
I think if I took all of these points into consideration and I were writing the film, I would choose to go with something original. If you were making a Japanese movie you might just get it to work, but an overseas adaptation I don't think will ever be able to carry one of the games outright - it's just too Japanese, not to mention that all of the things that make the games great would really drag in film format. Trying to force a game to work into anything longer than a short film sounds like a bad idea to me in this case (not to mention I would rather see an original story try than them destroy a game I like). They're just too... game-y. Different media. Some games you could convert into movies outright based on their cutscenes (cough cough 90-minute cyborg ninja show-off cough), but I think FF is too gameplay heavy for it to make enough sense. Which leads us back around to...
Original story! Like I said before, I think I'd like something similar to the Japanese movie as we can see from trailers and promo material, where the camera is featured and somewhat prominent, but not employed in the same manner it is in the games. I think if they took the basic premise and converted it into something that made sense in America they would be much better off than attempting to adapt an existing story, especially because they get to mould the story to their own liking without having to force it inside pre-existing barriers, and I think the same way about the JP film. There are plenty of creative ways in which you can convert the Japanese concepts to Hollywood ones and still use the camera in an interesting way, all without making a direct adaptation that turns out to be pretty awful, possibly because it's too close to the source material. I'm thinking something like the Spirit Camera mini dramas. If you create something new you also avoid the chance of disappointing fans by screwing up iconic moments they love, which is one of the major dangers with something like this. I mean, you might also turn them right off by making something new... but you can't really win here. We're picky people. By all means, take a few "nods" from the original series to give fans the "aha" moment, but I'd like it to be fairly original with the story itself. Switch it up a bit. Give us new surprises, and don't screw up what we already have. Not too much freedom, either, or we end up with Pyramid Head doing elaborate cha-cha-chas around guys tied up while goth cousins get jiggy with it and... what was the plot again? Oh, that doesn't matter, we've got booby nurses in the credits.
TL;DR: Please god don't try to outright adapt FF1 (or anything else) into a movie. Also get Sean Bean.