Before anything else: I
sincerely hope that you will persevere and finish your project, I would very much love to spend hours and hours playing that!
Ok, now some comments after about 20 minutes of play:
Visual Gorgeous, you did a splendid job with the environments and I love, love, love the mini map. The sprites are extremely well done, I love them!
Audio The fact that you hop between MP3s and midis will seriously damage the overall experience. I understand that far from all the PS songs were put into MP3s but I'd consider using rips from the game or even music that's not even from PS from times to times. As for the songs you use, I'd like to know the level of compression you use because the sound is muffled and scratchy at times. The loops aren't super clean either but unless you dabble with music software, I can understand how complex this must be to fix. The sound effects are very, very neat but could benefit from being a tad quieter.
Performance You already know it: the Palma map is an issue, takes a long while to load. This includes menu access time. I would make this the main tech issue to be resolved.
Gameplay Everything is very smooth and sleek so far, I love the menu navigation and the general feel of the game. However, since it looks like you're gonna emulate many aspects of the PS games, if you're going to make it a grind fest like PS I and II, consider making the initial fights less hard. Alis starts with 16 HP and 0 Meseta. My initial fight with two Sworm gave me 10 Meseta and left me with 4 HP. I had to go heal after one fight and it cost me half what I gained. Tedium: it kills a game. Further exploration led me to the warehouse where the critters are much easier to kill and levels come easier, the fault was thus mine by exploring an area I was not supposed to yet. However, the warehouse's initially accesible area is very small so it did meant mindless grind just so I could survive outside Camineet.
So yeah, as I said, I cannot wait for more and as soon as I get home tomorrow (I'm not home tonight), I will play through the entire demo and comment to my heart's content.
Well done sir, please continue.
Also: All my songs are yours for the using.
Edits:
I love, love, love your shops. So sci-fi, so neeeeeeeeeat! <3
Don't feel like you HAVE to emulate every old PS aspect, such as the crazy engrish. "Monomate is procured".

It would be nice to have a rundown of what stats increase when you level.