I'd have to disagree on the Omnislash thing. In cutscenes, it is well established that one slash is fatal. One stab kills Aerith, one slash almost kills Tifa. After the battle with Sephiroth, all that's wrong with him in the FMV is consistent with a general fight and not being slashed repeatedly at the head. In other words, the fight scene is just dramatic effect and a game element.
If Cloud could hit Sephiroth in the face with a sword in a cutscene (even once) and he did not die, but Aerith / Tifa are seriously wounded by the same, this issue would be far more obvious and annoying - and that's precisely what will end up happening in the remake. They'll break the wall that exists between the gameplay and the story, as they did in AC. The original FF7 team (or someone there) absolutely understood this.
It's well established that ordinary humans die of one slash - since Sephiroth isn't an ordinary human, certainly not within the life-stream, I don't think that argument makes sense.
I think the more reasonable assumption to make is that the developers simply didn't think that far, nor were really all that worried about it.
You can't really compare Sephiroth to Tifa and Aerith given that Sephiroth is enhanced by Jenova cells and can regenerate pretty quickly (corroborated Lucrecia) and the fact that Sephiroth literally regains his composure mere moments after Cloud stabbed him from behind with the Buster Sword.
I think that if we were to draw a completely line between the fights and the narrative, not a blurred one (which I think would be the case in FF7), then there are a lot of things that become contrived or difficult to justify as well.
It raises questions like how soldiers armed with swords are somehow able to fight and kill people armed with automatic weapons, robots
and monsters (and if you answered magic to that question, it still wouldn't make sense, since a gun and magic would still be better than a sword and magic).
It begs the question why Cloud can survive a fall from several hundred meters up in the air, but Sephiroth cannot survive consecutive hits from a blade, or how Cloud and Co (who're mostly equipped with melee weapons) fought Ultima Weapon or Diamond Weapon, or how Barrett can hit a guy so hard he literally hits the ceiling.
I think the fact of the matter is that FF7 isn't entirely clear about what's actually going on when we're fighting, and as I said, I don't really think Squaresoft even though that far ahead either. I think it's entirely possible that without the technical limitations, that we would have seen different kinds of actions scenes both in field screens and in FMVs, and that while certain scenes were certainly made the way the were made on purpose, other grew organically out of the limitations they worked within, which is why there are discrepancies throughout the game.
No story is perfect, because no writer is perfect - and games are even more vulnerable to logical breaks than media and art like books, because they're made by large teams of people who're not always working in perfect tandem with each-other.
I think the more relevant and apt complaint about the AC style of action is that it falls prey to what we in anime-circles call "the dragonball loop", which is that the more power you endow a character with, the bigger hurdles you have to make in order to make the narrative exciting - and the longer your narrative stretches on, the more powerful you have to keep making the character, until inevitably people start breaking planets with their power.
This is bad writing because it comes a point where your character is so powerful that all conventional story-telling devices etc. cease to work properly as a result.
How does it make sense, for instance, for Cloud and Co to be trapped in an elevator and locked up by the Turks if Cloud is established to be on par with Neo from the Matrix in the first cut-scene of the remake?
This is also why the AC plot-line is so contrived - after all, Cloud already beat Sephiroth once, so he shouldn't really have any trouble doing it again - so the entire Cloud's depression thing, and geo-stigma are probably literally plot-devices made for the sole purpose of making that fight have any kind of arch of suspense.
These are real concerns that relate to the production of the remake.
However, whether Cloud can actually do an Omninslash at the end of the story when facing Sephiroth is not.
That's why some levels of flash and acrobatics can work, whilst a lot of it can't - not because flashes and acrobatics are inherently somehow incongruent with the plot (because they obviously aren't).
They can't be if Cloud is supposed to fight enormous monsters, and people wielding guns with his sword. It has to be reasonable to expect Cloud to fight at a level that is, at least to a certain degree, significantly above that of ordinary humans wielding machine-guns.
The flip side of the coin is of course, that you can't have too much of it either, because, as I've already demonstrated, that breaks the plot as well.
A balance has to be struck for the plot to work - Nomura probably isn't capable of this though, so it doesn't really matter in either case.
