Someday I will go on a Great Hunt for all the good FF/KH fanfic that makes intact backstories work, and I will bookmark it ALL, because it really is fascinating. There's definitely good stuff out there for FF8, but 7 is tricky.

Have you read But That Was in Another Country? I'm pretty sure that, at this point, it will never be finished, but it's still my favorite take on getting the FF7 characters there.