Honestly, the way Deepground is structured, the architectural style, and the single reactor at its center, along with the old ruined roads and stuff, always gave me the impression that Deepground was the original city of Midgar.
Don't have anything to back that up, of course, but it's just got that vibe, to me. Like, maybe that's where Shinra Manufacturing Works built the first reactor and conducted their research, then an incident destroyed the town and they covered it up by building Midgar over it.
Of course, that doesn't explain why it's miles underground or anything. I suppose it could've all just been constructed for Shinra's scientists and the people living down there, but it seems like a bit much for a wacko research center.