In my opinion, it sounds BAD for two reasons, and GOOD for one reason.

Bad: Not to be able to move on just because your stats are not high enough, would probably make a lot of players frustrated.
Bad: It might just be too easy or not challenging to simply "walk through" a monster, some people will find it boring, unless the story is really good.
Good: It might be a good change, if you have a good replacement... Perhaps you can turn that into Quest Points which you receive from side quests. Some people, like me, just hate the regular battle system; I find it repetitive and annoying, unless it's really really really good like in Balmung Cycle, or unless it's customized. In my game there is an option to 'Turn Battles Off and On'...

Yeah but when you're carrying around a 30 foot sword and can jump a million feet in the air with it, I don't think you need to much more practice.

That's what equipment weight is for. Just take away agility depending on the weight of the weapon, requiring you to either purchase stat raising items (gold via battles) or battle to level up. Even if you could carry a 30 ft sword, would you be well trained in the art of swordplay to be able to use it? If not, then that's where training in combat comes in.

I find it rather strange you even expect FFVII to be realistic, considering it has monsters and magic.

Ah.. Right.   And yes, that makes sense- it's somewhat more realistic than not. My apologies - I feel I've been rather argumentative these past few days.

Oh, you mean world map monsters, avoid them, good thinking. Doing that for Midas Force if I ever get it progressed though.

This "battle-less" (it's not really "battle-less" if you have battles) system sounds like "battles" between units in games like Civilisation. IMO, this kind of battle wouldn't work in an RPG.

In a strategy game, you have a wide-range of unit types, a large number of units and you get to deploy these units whenever you want. Because the strategy behind choosing the right time for an attack and choosing the right units based on the opponent makes up the bulk of the game, the simplicity of the battle system doesn't ruin the fun.

On the other hand, in an RPG you have a small number of unit-types (classes), a small number of units (characters). This means that there is a very small strategic element prior to entering a battle, even in games likes Final Fantasy Tactics were class progression/choices and equipment choices are a massive deal. Instead, all the strategic elements are found in battle (what specific spell to use, when to heal etc.), so excluding the player from this will ruin the fun (or, at the least, make their choices seem meaningless). Also, because you're forcing people into fighting in your game, you're removing the "timing of an attack" strategy too - you're basically giving the player nothing to do and this is bad!

Equally...

As you play as the "commander" in a strategy game, not having individual control over each unit makes sense - all a "commander" does is tell his "troops" where to go, he doesn't get to shoot the gun for them.

As you play as the individual units (characters) in an RPG, not having individual control over them makes no sense at all.