I disagree with this proposal, especially from the premise that it worked for Kingdom Hearts and Dissidia. Those are very different games, and have no basis in any of the respective characters' realms. You shouldn't expect to canonize what happened to Cloud in Dissidia and Kingdom Hearts to Final Fantasy VII. The compilation of FFVII is different as it is specifically meant to add onto the story of the original game. The fan service games were made specifically for fan service reasons and they are respected accordingly.

I also think they would lose as many players as they would gain if they implemented such a system, but ultimately, it would cheapen the experience. Loose connections I'm fine with i.e. the materia system. Considering Yoshida's "use it if it works" philosophy but only if there is a purpose for it, i.e. "there needs to be a practical purpose for the giant cake before two cooks can make the giant cake".

Cairdeas's proposal, while trying to give the concept legitimacy, in my opinion falls short of expectations when it comes to good storytelling. Introducing Cosmos herself with her motivations intact is fan service enough without the additions of Sephiroth, Kefka and the like.

Cid, moogles, airships, Gilgamesh, summons, and the use of similar system concepts is plenty of leeway to keep fans interested. These things need to exist first before iconic characters that defined their respective Roman Numeral'd games. Even before that? The promises the original team made. Only after those options have been exhausted would I think it to be plausible, and only form a financial perspective, to introduce such a system. Then again, if it gets to the point where that is the only thing that would "save" the game, one should really start asking themselves if they really think it's worth it to pay a monthly service fee to continue to play such an obviously flawed game.