qfe. iMuse I think hasn't been bested in gaming today, and it still managed to sound damn good.
I like to think of dynamic music as a realtime cutscene as opposed to the pre-rendered kind. The interactive medium will always benefit from using MIDI in terms of being seamless, and not at all disconnected with the gameplay. You can try and emulate the dynamics a la Final Fantasy VIII (or at least the intro cutscene in the demo, that's all I played), but it's all down to how smart the designer is in transitioning them.
Then again, it certainly wouldn't hurt if Kondo and crew updated their samples for once.