Those are "Mystery Panties", which was an unused key item for the original game.
Most people deduced these were Tifa's "Orthopedic Underwear", which you could collect jokingly during the Nibelheim flashback.
It turns out, however, that the panties are part of a bigger, darker secret buried deep within FFVII's coding.
The passage below is taken from two websites, GlitterBerri and Lifestream.net:
Originally, the HoneyBee Inn was supposed to have several extra floors and rooms to visit, filled with patrons talking about the newest hostess, Tifa. Turns out in order to seek an audience with Don Corneo, Tifa had to work her way up the sleaze ladder to rank as one of the top girls at the Inn in order to catch Corneo's attention.
During this stage of the game, Tifa is already at Corneo's mansion awaiting an audience, so Cloud is tasked with collecting the necessary items in order to create a convincing crossdressing outfit in order to be let in.
Now that the context has been established, I'll let the video speak for itself:
If you hadn't quite pieced it together, you can get the quick and dirty version below:
At one point in FFVII's development, you were able to procure a stolen pair of Tifa's panties from a pervert, which can be used as part of Cloud's disguise.
Only they aren't Tifa's panties....they're Marlene's.
Once you've come back from your fifth shower scrubbing off the imaginary filth you feel yourself covered with, you're probably wondering who would come up with such a twisted idea.
Behold the man responsible...
Food for thought.
A translation from page 569 of the FFVII Ultimania Omega, in response to a question asking the developers about ideas they’d had that weren’t implemented in the game, highlights this disagreement:
Nojima: What I remember is the Honey Bee Inn. Toriyama (Motomu Toriyama, the director of FFX-2) was in charge of the Honey Bee Inn’s events, but at first what took place there was more extreme, and everyone was saying “That’s going too far.”
Kitase: Was it really that bad?
Nojima: Yeah… for example, Palmer would emerge from the inn saying “Well, that was refreshing~!” *laughing*
Kitase: Toriyama was always making weird, tricky little events like that that kept getting edited. For instance, there was once a scene on the station platform where Biggs, Wedge, and Jessie from AVALANCHE would face each other and try to combine into one.
Naoyoshi: Yeah, that’s right.
Kitase: When an event begins in FFVII, the other 2 party members separate themselves from Cloud’s avatar. Once the event finishes, the party recombines and Cloud is alone once more. It’s just the way the game’s set up, but Toriyama parodied that. The 3 members of AVALANCHE were like “Let’s do that too!” and do their best to combine together, but they just ended up running into each other and muttering “I guess we still don’t have enough practice.” *laughing*
Not only do we get proof that Motomu Toriyama was the most perverted of the bunch, but his desire to joke and break the fourth wall also resonates with the unused “We apologize, but the following contains material unsuitable for the general public” line from ONNA_4. Elements like the Mystery Panties and the stronger adult “showgirl” tones of the lobby are clearly aspects that Toriyama would have greenlit while others might not have been so keen.