First off, the PSX Kernel is almost like the PC kernel except that it keeps the text strings all in one file instead of keeping them in a separate kernel2.bin file. Wall Market works with both though; just make sure it's in PSX mode when editing the extracted PSX kernel.
You need to get a tool like CDMage to extract the Kernel first; this version should do the trick:
https://mega.nz/#!fsU1RYQK!v_FTaA8IuyKHgdL1XDwwzuyJ7fMPs3CH3R-xEHlOr54
Open your disc as a Track M2 (2nd option) rather than the default M1 track. This should load the disc + its files properly. Click into the disc's file structure and look for the INIT folder. Right click on the Kernel.bin inside and extract it to desktop (by default it will try to extract to temporary file folders, make sure to specify somewhere you can easily find it like desktop).
Make your changes to the kernel using wall market tool. Try to keep your file size smaller than the original if possible (as in, by using less text overall; you can try shortening some text here and there to ensure that it does). This is because when we import it back into the disc, it needs to fit in there. It's OK for it to be smaller but can be a hassle if it's larger.
Open the disc again in CDMage (M2 track as before) and go back to the INIT folder. Right-click the KERNEL file and select import, and put your modified kernel in. If it's smaller, it'll ask if you want to pad the file with 00s; confirm and should be ready to go.
If your modified kernel is unavoidably larger, then there's a patch that can be applied to the disc that moves the scene/kernel to a new location with no size limitations:
https://www.ff7catalog.com/threads/7704/