Cloud is the ideal protagonist for FFVII, exactly because he fits with the "defying expectations" the OG had set up for itself. Up until that point, the Final Fantasy series were mostly medieval fantasy, sometimes with steampunk elements. VII was the first time this game abandoned kings, queens, knights and everything else for a more realistic and modern setting. Midgar would be an impossibility in previous titles.
For such a game, a protagonist who was different from the norm was needed. Enter Cloud; swordsman, spiky hair, huge blade, frowned expression, aloof, badass attitude... and you go on and learn that he's mentally 16, suffers from PTSD and he's a liar who never made his dream come true: he was never "the best of the best" a SOLDIER. He was so embarrassed that he HID from his entire village because he couldn't bare his failure. A true SOLDIER, Zack, sacrificed himself to save his ass, even. Then, the same pathetic loser who couldn't even show his face after he bragged went and forgot Zack, while taking on a bastardized image of him, a mercenary who only cares about money.
Cloud has been pathetic since 1997 and that's why he's the perfect protagonist for VII, a game with twists and turns. It's the same guy who did kill Sephiroth in a moment of rage when the latter had his guard down (and Cloud did get defeated by Sephiroth even then) and the way he saved the world and defeated the Big Bad once and for all was a mental battle in his brain, where he simply had to destroy the image of the great war hero he had made up in his mind.
FFVII pretty much said that it's OK if you don't achieve your goals, if you're not a great hero... just get rid of your misconceptions, your idols, admit and embrace your weaknesses and you're good.
If FFVII was the typical JRPG of that time, Zack would have been the hero and Aerith would have lived. Buuut...