Sakaguchi's creative influence is definitely not overrated. Since FF6 (I think?) Sakaguchi's role in FF has been mostly advisory, with the exception of him coming back to write FF9. While the story in FF6-FF8 was mostly written by other people he did have some input on it - I think it was similar to his input on Chrono Trigger. Kato was the story writer for that one, but the story he proposed was discussed thoroughly and changed by a much larger team including Horii, Kitase and Sakaguchi:
Kato:
"After that, for the first year I spent hours every week in meetings at Mr Horīs studio. I had to summarise any suggestions Id been given or ideas Id had about quest scenarios. Id then take the parts that wed worked on in the meetings back to my own company and think about how to continue those stories."
Sakaguchi:
"Horii and I both work in the same field, so there were no real fights between us, but he has his own ideas about how a game should be made, and we clashed on a number of points. Those confrontations gave us the opportunity to think very deeply about the game, though, so I think it was probably a good thing."
Kitase:
"When Sakaguchi officially joined the Chrono Trigger development team, the first thing he got his hands into was the scenarios. There was a scenario involving Marle, where a time paradox occurs and the Marle you end up spending the rest of the game with is actually from a different timeline." / Sakaguchi: "With time travel as our theme, you could have the same character be a totally different person if they belonged to a different timeline. That was the planners original idea, but I said it was no good. I said that even if the player changes history, when you return to your original time, it should be the same Marle there that you knew from before."
(Source:
http://neogaf.com/forum/showthread.php?t=1196519)
While he didn't write the full story of each game, this kind of input shouldn't be underestimated. For exmaple, ideas such as Aeris's death came from Sakaguchi (see below).
If I remember correctly, he also always came up with the main idea/setting of the games, which the rest of the team then modified and wrote a script for (I think this is still how Mistwalker does things). In your quote he mentions Kitase doing the "event scripting" for FF7, but Sakaguchi actually did write a story for it first:
The original story by Hironobu turned out to be very different than the finished product. It was a detective story that included a hot-blooded character named Detective Joe, who was chasing the people who blew up the city of Midgar. Other things survived from his story however, including the specifics of the Lifestream.
In the middle of development for Final Fantasy VII, Sakaguchis mother passed away, and he was driven to create a story that dealt with death in a more realistic way, giving us Aeriss famous death scene. He wanted to make the death effect the story in a way that previous deaths in the series failed to do. He wished to show a non-sacrificial death, as that kind of Hollywood death didnt affect the continuing characters lives in the way her death did.
One contribution of Sakaguchis was his wish to show character expression on the field screen, thus creating separate character models in battle and on the field. This was of course disregarded with Final Fantasy VIII.
(Source:
http://www.ultimafinalfantasy.com/ultima-final-fantasy/about-square-enix/hironobu-sakaguchi/)
In the games where he did have a lot of input on the stories (for example, FF9 and The Last Story), the stories themselves may not have been great, but I always found them satisfying. He knows not to let things drag on for too long (i.e. pacing). I also always found that he creates a good variety of entertaining and likeable characters. Note that while Kitase's melodrama you speak of is present in FFXIII, the characters and storytelling in that game weren't received very well - I think things would have been different if Sakaguchi had still been there.
But yes, his main input in FF6-8 was his eye for talent and that he knew how to get things done (and he still does as shown by the rather short and simultaneous(!) development cycles for Blue Dragon, Lost Odyssey and The Last Story). I think Tabata isn't a bad replacement for the "business man" side of Sakaguchi (though I think he should keep the marketing team in check), but whether he is capable of having a similar creative influence remains to be seen.
