Born Loser: Cloud does everything wrong. He loses the girl - two actually - and hands over the means of destroying the world to his archenemy. His companion must save the world because he can't. He's having a bad life.
Split Personality: He hears a voice in his head because he's buried his real personality so deeply that he's started thinking he's someone else.
Any two of these and Cloud risks being a walking cliché. All four and Cloud becomes interesting. We later discover that Cloud's seemingly contradictory traits are caused by deep emotional pain from his past, adding real depth to the character. The designers have effectively used Freeman's "character deepening techniques" and "character interesting techniques" (so called because they, uh, make the character interesting).
The other two main characters are Tifa and Aeris. Tifa is the shy, yet popular and gorgeous (of course) girl that Cloud pined over while growing up. Aeris is the mysterious flower-girl from the opening scene. The trio develops over the course of the game, and we can't help but emotionally empathize with their predicaments and pain. As we empathize, they become "real" to us. Every moment, our emotional connection to the characters grows, thanks to liberal use of dialog, cut scenes and in-game events.
For example, at one point the captured main characters wake up in a prison. Because of the thin walls, Aeris hears Cloud in the next cell but is unaware that Tifa is there as well.
This is their dialog:
Aeris: "I knew that Cloud would come for me."
Cloud: "Hey, I'm your bodyguard, right?"
Aeris: "The deal [for you being my bodyguard] was for one date, right?" (Tifa sits up.)
Tifa: "...oh, I get it."
Aeris: "...!? Tifa! Tifa, you're there too!"
In just 29 words of dialog, the designers have exposed us to the trio's character diamonds, while simultaneously establishing tumultuous and conflicting feelings between them: Aeris' flirtatious nature, Tifa shyly changing subjects and Aeris quickly redirecting her attention to Tifa. Freeman would call the realistic layer of feelings between Tifa and Aeris, close friends fighting over the same man, an example of "NPC to NPC chemistry" and "relationship deepening techniques."
Square also encouraged the young male demographic to identify with Cloud because two women admire him. Freeman calls this a "role induction technique." Yet, the positive feelings of having two women admire Cloud are offset by the knowledge that someone must eventually get hurt. Freeman calls this an "emotionally complex situation." Final Fantasy VII uses Freeman's techniques so frequently, we ride an emotional roller coaster over the main characters' plight.
The Death of Aeris - A Watershed Moment
Sadly, the game's oedipal-complex -ridden villain, Sephiroth, grasps desperately for characterization before coming up wanting. He has no character diamond; his motivations remain virtually indecipherable to the very end. As far as I can tell, he goes on a killing spree because (I'm not kidding you) he finds out his mother is a headless monster that fell from space. The game designers, sensing Sephiroth's shortage of character, gave him a 20-foot long sword to compensate.
