I think I’ve also heard it called and read it as “Earth” without an article: “life on Earth,” “Earth was our home.” But I don’t know if that sounds awkward or is incorrect, I’m not equipped to argue over the finer points of the English grammar, so I won’t even try
For what it’s worth (very little probably, since we’re discussing an English translation choice of a Japanese term), I can tell you that at least in my language, “la Terra” as in our planet is 100% a proper name, because it’s
the name of our planet. And unlike English, it’d be pretty much
impossible to write it without an article.
Proper noun or not, we live on planet Earth. I'm not sure you're suggesting this, but if I were to apply the reasoning behind the earth/Earth and sun/Sun distinction to FFVII, I'd be inclined to conclude that they live on planet Planet. You might argue that our sun’s the Sun and I wouldn’t disagree, but the word "Sun" (and Sol, for that matter) apparently originated from a verb that meant “to shine”. That makes sense, it’s something that everybody could see for themselves, just like everybody could see that we live “on the earth.” Words are not created in a vacuum. I find the idea that everybody could immediately see they lived on a planet unconvincing, and while I could think up a few solutions, such as an altered or lost meaning of the word, I think it’d be less convoluted and it’d make slightly more sense if it just had an actual name that we don’t know of. It’s probably another reason why the popular misconception that the planet is called “Gaia” just won’t die.
I’m not disputing the fact that it could be a nice way to explain the planet/Planet distinction, but I don't think they did it consistently enough for that to be the case. If I had to guess, I’d just say that the translator(s) realized too late that this particular planet was treated pretty much like a breathing, living entity and wanted the translation to reflect this. I just think that using a technical term that way is a bit of an awkward choice that can be misleading when not used carefully and doesn’t hold up that well under closer scrutiny, especially when comparing it to real-life examples.