Maybe you’ve seen this parodic image. This isn’t as far from the truth. It’s much more than just lazy writing. What I think they were going for was a direct inversion of story.
Final Fantasy VII took every cliche that Final Fantasy VI had and turned it on its head. Up until Final Fantasy VII, Final Fantasy dealt with the medieval. Final Fantasy VI introduced steampunk elements. Final Fantasy VII ditched the medieval, kept the fantasy and forced us to think about how this genre works.
Instead of an evil empire questing for non-descript “power”, we have a greedy conglomerate questing for control of resources. We don’t live in an age where empires invade kingdoms as frequently. But we do live in an age where companies engage in hostile takeovers. Some of these companies are in collusion with countries, which is analogous to Shinra.
Our main hero is a grunt again. Cloud doesn’t have supernatural “magic” abilities. He’s a regular guy a “powerful substance” enhancement. We can relate it to the idea of injecting soldiers into our world with steroids. The substances in question are mako and magicite. In Final Fantasy VI, the Magicite comes from magical creatures. In Final Fantasy VII, mako is a resource analogous to oil in our world, made from regular lifeforms.
Life Terra, Cloud has amnesia. But his amnesia is due to confusion of identity. Cloud joins a resistance group for the money. Terra was hesitant but clearly without any real motive to do so. Instead of simply “returning” the Planet to what it was, AVALANCHE meant to topple Shinra. Barrett, as such, is less noble than Bannon. But at least with AVALANCHE, we can’t pretend they aren’t terrorists. As with the Returners, every Freedom Fighters is someone’s terrorist.
Soon, we meet the true foe. The big bad. Sephiroth is a soldier who feels betrayed by those who used him and want revenge. We see disillusioned soldier all the time. We do not see crazed jester-like psychopathic generals who are loyal to a fault. We also start to see evil in context.
Sephiroth simply became misguidedly evil. Before, we knew he was cold but somewhat of a good guy. Kefka was always inexplicably evil. Kefka might do well to twirl a mustache, whereas Sephiroth was a tragic soul. They murdered to find meaning, and when seeing none, declared themselves gods. Kefka works using magic and moving magical stones. Sephiroth uses a meteor.