The easiest place to begin in analyzing FF7 is to start with the origin of Sephiroth. One thing some people fail to realize is that Sephiroth is not in fact the son of Jenova, as he claims, but the son of Lucrecia with Hojo, who is then injected with Mako energy by his father as an experimental life form. His desire to become a god by summoning the meteor to detroy people of the planet and absorb their lifestream is a byproduct of his genetic predetermination inherited from his father. We see that Sephiroth, like his father, likes to show off. Eventually, (here's the sci-fi dimension comes in, to be elaborated in FF10) Sephiroth gains the ability to send off psychic clones and manipulate people psychologically, existing as a sort of being between physical reality and mental construct.

The psychological complexity of FF7 takes off with the character of Cloud, one of many characters whose names denote what they are. Cloud's origins are ignored, perhaps deliberately. What we know is perhaps what Cloud himself remembers, most of which is borrowed from the Soldier Zach, another aspect of the psychological realism of FF7, a property that sets it apart from all previous FFs. What little info we gather about Cloud comes from the Mideel sequence, in which Tifa metaphorically walks into different parts of Cloud's brain to elucidate his character: an introverted, proud, but (what he felt was) disgraceful and unsuccessful kid who couldn't make it into Soldier, but whose hiddent talents allowed him to once vanquish the mighty Sephiroth.

As outlined in the best document on the subject I have seen (found here, we learn that Jenova is a sort of disease that came upon the Cetra, and hence Sephiroth's identification with it is clearly mistakened, and is an indication of his Hitlerian character, the same trait that was inherited from his father. The shy and loving Cloud, on the other hand, looks up to Zack and loves Tifa, and represents the polar opposite type of person from Sephiroth. These two personality types clash metaphorically as well as literally at the end, when Sephiroth's last desperate attempt to gain control of Cloud fails, and he is returned to the lifestream. Meanwhile, the good and evil of the planet also duke it out in response to the meteor's clash onto Midgar. At the end, it is the superhuman influence of Aeris that works out the conflict between Lifestream and Holy which is manifested in the battle between Cloud and Sephiroth.

To be continued.