So a brief look at Final Fantasy VII NES Hack reveals the following changes have been made:
-Inclusion of FF7 tracks in 8 Bit Arrangement. FFVII NES C had made use solely of old FF2 tracks.
-Redone field maps. FF7 NES had done a fairly decent job of making the map look unique, including making trains and stuff, but FF7 NES H has done a fair amount to reproduce the actual game's maps. So the train stop looks a fair amount like a top down, 8bit reproduction of the area.
-Redone character and enemy sprites. FF7 NES had edited sprites for the cast already (Cloud and Tifa were edits of Firion and Maria, but Barret and Red XIII looked fairly unique, for instance.) The cast has been altered to look more like their FF7 selves, though I feel there's a certain loss of charm here, since the Chinese sprites were quirky, whereas these ones are just demade FF7 sprites. FF7 C made use of recycled enemies, leading to hilarious moments like Sephiroth sprouting boobs and Reno donning platemail, but this is a bit more forgiveable since the sprites were really haphazard anyway.
-Rescaled difficulty. In C you could expect to deal 4 HP per turn the entire game to enemies with thousands of HP. In H Cloud actually does damage and so the odds are stacked in the player's favor. Stacking the odds in the player's favor may sound like the game is dumb and easy, but the truth is that nobody wants to spend half an hour in a random battle and that "difficulty" created by stacking odds in the enemy's favor (which includes leveling the playing field) can be just as cheap and dumb.
Of further note is that I think Magius is right, and the game is in fact a hacked version of FF2, since Materia and weapons gain EXP by usage. That said leveling Materia up grants the use of different abilities, which was not in FF2.