Ok I think it's pretty obvious that a graphics update to FFXI isn't going to happen. However there are things they could do to improve the existing client on modern PCs that wouldn't be too hard to implement and which would not affect PS2 support at all.
First of all, change how the resolution select works in the config. We already know that FFXI supports any resolution your graphics card is capable of so restricting the "background" setting to a maximum of 1024x1024 in the config utility doesn't make sense.
Furthermore, the whole "background/overlay" system they use is confusing to new players. They should change the "background" to be a fraction of the overlay and change the name to "Rendering resolution" with a help text that explains what it actually is. So you can select the resolution you want and then choose 1/4 1/2 2/3 and "full resolution" for rendering (this is the way FFXIV does it).
Update FFXI to DirexctX 9 already, DirectX 8 is dying and Nvidia and ATI hardly care about it. This would solve 95% of the problems FFXI has on Windows Vista and Windows 7.
60fps support. FFXI's graphics engine *does* support 60fps, there is a cutscene in COP that runs at 60 fps (the one with the demons) and the FFXI benchmark also runs at 60fps in places. So we know this is possible without having to change any of the animations for the models.
MSAA support, or rather, MSAA support that isn't really slow. At least on ATI cards if you match the overlay and background resolutions (e.g. 1280x720 for both) then forced MSAA actually works with FFXI. The problem though is that it is very slow with shadows enabled. MSAA already works with FFXI, so it's just a matter of fixing FFXI to work better with it.
Adjustable menu size. Add an option to draw the menus larger so that everything doesn't become unreadable at very high resolutions. Even if it's just "draw all menus at 2x size"
An option to restrict the width of the UI. So say if you were running the game at 1920x1080 you could restrict the width at which the UI is drawn to 1440.
Related to the above, user defined aspect ratio, or alternatively just have FFXI assume square pixels. Almost all displays these days use discrete pixels anyway. Combined with the above they would allow FFXI to work with eyefinity three monitor setups. FFXI can already run on three monitors because they simply look like a single very wide display to applications. The only problem is that FFXI is limited to 16:9 and the UI spans all three displays, so while it works it's not very useful.
EDIT: Adding two extra items.
Add a slider to increase draw distance of terrain. Modern PCs have no problem with longer draw distances.
Add a slider to adjust distance for level of detail adjustment (LOD) as well as an option to turn it off completely. As with longer draw distance modern PCs would have no problems with this.