I'm gonna go a little bit more deeply into my own thoughts on the compilation. I may be a little long-winded here.
But seriously, as tasteless as it is bringing Rufus back for AC/C, it is concievable he might have survived the explosion. And really, its not a deal-breaker for the Compilation by any means. Though it would have been better if Rufus had been dead. It would have been an interesting piece of developement for the Turks to try to make up for past actions by taking the initiative in going after Jenova's remains even without the Shinra or Rufus to tell them what to do.
Regarding the Compilation as a whole, I think AC/C meshes really well with FFVII. Aside from Rufus being alive it meshes almost perfectly, and as I said earlier Rufus being there while annoying and kinda tasteless, is not a dealbreaker.
It wasn't until DOC CC and BC showed up that the Compilation began to suffer, though LO is where it started. The plot inconsistencies in these titles really hurt them, though to be fair I don't remember any real retcons in DOC, just a general lack of quality.
CC is where the Compilation had a chance to be something truly incredible, but due to certain retcons, such as the combat between Cloud and Sephiroth, Genesis being at Nibelheim, and a few other minor ones, plus the distasteful way Zack's death was handled held it back. It was still a good game, but not nearly what it might have been if more care had been put into it. For example, with a little bit of effort Genesis and Angeal could have been really interesting and unique characters. To be fair, Angeal wasn't really annoying at all, like Genesis 'I love Loveless' Rhapsodos, but he wasn't very interesting either.
Can't speak very much on BC as I have a limited knowledge of it. Though as I understand it its version of Nibelheim is inconsistent with the other versions. Unsuprising, since that scene has been retconned more than anything else in the FFVII universe. The differences there between the OG and CC could have been explained away easily enough by saying Cloud's memories of those events are still slightly scrambled, and given how fucked up his mind has been over the years we could buy that. But then BC and LO come along with their own versions and it just gets tiresome.
DOC was kinda pointless as well. Vincent's cool, but he didn't really need his own game. It wouldn't even have been so bad if the threat had been on a smaller and more perssonal scale. Deepground in and of itself is not a bad concept, but it was handled poorly. Also, the whole thing with Hojo was kinda stupid. If I had been directing the game I would have focused it around Vincent maybed beggining to lose control of Chaos and becoming a danger to those around him, and he has to find some way to stop his loss of control before its to late. Not sure how Deepground could fit into that, if at all, but thats what I would do.
Theres also the fact that, rather than exploring pre-established pieces of FFVII, such as the Wutai war or Jenova's arrival, the Compilation seems to enjoy making up entirely new crap, some of which is cool, but most of which feels forced.
Its all very irritating, but the Compilation still has strong points. Developing Zack and Sephiroth's characters, giving us a better idea of how SOLDIER worked and operated, showing us the aftermath of Meteorfall, and of course the action scenes which are stunning. I don't know about you, but the ACC Cloud vs. Sephiroth fight is probably my favourite fight scene of all time.
I generall deal with this the same way I deal with Star Wars canon. The OG is the highest level of canon, and everything else, games and books and comics, are also canon (Unless stated otherwise) except for the parts that clash directly with the OG.
So for example, most of CC would be counted as part of my continuity, except for things like Zack landing on the stairs, Cloud fighting Sephiroth in the Jenova room instead of on the walkway, and if you're really picky, Genesis being at Nibelheim.
Personally I'm neutral regarding that, as technicly they didn't alter the scene for him to be in it so much as they extended it. It still doesn't work particularly well in the grand scheme of things, but it does fit.
So anyway, thats my in-depth thoughts on the Compilation. I feel better now.