I think the biggest issue with changing the story, is Nomura isn't a good writer at all. I would go as far as to say this is probably a case of someone's ego getting in the way. Nomura probably looked at the story of FFVII and thought "You know what? I can do better." Which is insane and stupid for two reasons:
1. FFVII's story is great as is and at most would only need certain elements fleshed out more to deliver a better experience.
2. Fans have been asking for almost two decades for a remake of the original game, just with modern technology. Then after years of teasing, blue balling, and flip flopping on whether or not they'd remake it, they finally decide to do it, with thunderous applause.
So to drastically change the story is just an insane move, and to be frank, in bad taste imo. I wonder how many people involved in making this game thought this was a bad idea, but couldn't do or say anything. But more to the point, IF Nomura had a track record of being a well respected and talented writer, I think a lot of people disappointed that this isn't a true remake, would be willing to give it a chance and see where it goes. But Nomura isn't a good writer. He's the kind of writer who just does whatever comes to his mind, without thinking about how coherent and logical the overall narrative would be as a result of it.
What we're probably going to get from this whole thing, is a great roleplaying game, but an absolutely butchered retelling of FFVII's story. And unfortunately, as fun as FFVII was to play, it was the story and characters that made people fall in love with it.