I'm not sure about the reboot (if it's done well then I'd welcome it I think) but I'm going to laugh if there's like a new generation of fans causing an uproar over it like DmC. (That's not Chris! He doesn't smoke-oh, wait a minute...)
For me, ever since Resident Evil Code Veronica X, I've been waiting for that plot to continue on from that. And it's just been sequel after sequel of all this other stuff...when all I really wanted to know through all that was what the hell happened to STEVE!? :'( Really, don't tease a character's possible return at the end of your game and then ditch the concept entirely and leave some fans hanging for 10 or 12 years.
But it's not just that, characters like Barry and Rebecca haven't really make much of an appearance much beyond the RE1 timeline. New ones keep popping in, and although I don't mind a new face (although some weren't as welcoming, Rachel) I just miss seeing more of the original cast.
If they do a reboot, that's what I'd want. More focus on Chris and the gang, and more development in their characters so we get them a bit more.
Steve Burnside fell subject to experimentation by Alexia just like she had done to her father. Wesker states at the end of the game that he had recovered Steve's body because he needed a sample of the virus and he got his wish. So yeah, I'm pretty sure Steve is dead.
As for starting off with a new character for Resident Evil 7, haven't they already done that? If they star Jake Muller as the only playable character for the game (Or maybe make Sherry the second player again or something) that's pretty much the same thing. Because Jake isn't a long time character in the series, he is a new addition.