I completely agree with the OP. Not only do I think that characters like Lightning, Cloud, Sephiroth, and even Terra don't fit in to the world of 14, but I seem to recall this very issue being brought up around the time they announced the Crystal Tower, and I recall Yoshida making the point that they specifically wouldn't be doing exactly this.

Which makes me wonder if perhaps this is not Yoshida's decision, but rather one he is forced to act upon. Either way I think this is ill fitting to the game itself, and makes me lose a little respect for the dev team and Square Enix as a whole.

Making oblique references is one thing, but bringing in a character integral to the story of another game is crossing a line.