Q: Is a No Battle/Encounter Hack possible?

No battles? Definitively not interested.

By the way it should be easy applying Moogle Charm effect to an equip, assigned to all characters as soon as recruited. (with Hex it should be possible the same setting of Biggs and Wedge and so deny the chance of remove this equip)
The same for area encounters, which you can set as no encounter areas.
To remove event battles you might do 2 things: remove invoke battle commands from events, or directly editing invoke battle event commands in order to obtain as result making those commands useless... for example setting as first byte 60(which makes return the function) and so solving the whole thing in 3 bytes... quite drastic anyway...

On a side note i believe that the most amazing stage for special effects and cutscenes is actually the battlefield: you can place enemies and whatever you want, without making happen an actual fight(like battles in the esper gate bridge)
You can set all spells to having 0 power or, even more perky, setting it as always miss and then changing "miss" or 0 damage word from some program like YY-char and then cancelling "miss" or "0" text into literally nothing... now you have your marvelous fake spell, just for animations, in the perfect style of fake spells used in FF9 when Tantarus fight against Steiner
The rest would be a matter of Variables and AI scripting.

On a side note i'm forced to point that out:

"where you enter a story, somewhat more passively than otherwise"

It's totally misleading believe that battles can spoil or making somehow less enjoyable the story of the game!