Sometimes I feel that people forgot that FFVII launched on PC as well in that generation.
the pc was an afterthought, as far as FFVII was concerned. it was developed by square purely to see if they could milk anymore sales out of the title. remember, the only other two platforms this game could be released on was the saturn & the n64, and those were def no go's.
this port only came into fruition after FFVII already shot its load on the psx ecosystem.
i'm not sure if you were around in those days, but FFVII wasn't just the posterchild of the Playstation 'juggernaught', it was the symbol that represented the breakdown of relations between nintendo & squaresoft.
in short, this game fundamentally highlighted nintendo's biggest hubris in that generation.
FFVII & playstation are so closely linked to each other, that of course it would be shocking to see that cloud was in smash, and further to that point, that he couldn't even be secured for a sony brawler that celebrated mascots linked to the playstation market.
personally, i really don't care. i owned a playstation that gen too, and i absolutely loved it, but I can see why this sort of 'thing' may seem like a big deal to many -especially as far as "video game politics" are concerned.