I am proof that you can make a Final Fantasy fangame and not go completely insane over the response from GamingW.
But, with that said.. I definitely would not want to do it again because yeah, you're sticking yourself with a pre-made mould of sorts to work with, and to be honest.. I find it easier to get stuck making a fangame than it is to make a game with your own setting. Even if you're making your own storyline in a fangame, you're limiting the number of tools you have to work with. It's cool and all to pay tribute to the games you grew up playing, but you're severely limiting your potential by doing so.
Original games > Fangames
HOWEVER... If you decide to continue making an FF fangame, then here is a good example of how to handle criticism from GW:
http://www.gamingw.net/forums/index.php?topic=10805.0