I've actually been giving this some thought lately as I play through the game for the second time. The first time I played FFVII was a few years ago, long, long after the hype proper had died down and it was regarded as a past event. I loved the hell out of Final Fantasies III through VI (and was reasonably fond of the first, as well,) and with all the talk of "best JRPG ever," I had pretty high hopes for the game. I think this is primarily where it suffers. With as much ridiculous laudatory regard as FFVII gets even today, it would be hard for any real, extant game to even come close to living up. So yes, Final Fantasy VII is incredibly overrated.
I mean, seriously, the graphics are considered revolutionary? They're not even consistent! Every single prerendered cutscene is at a noticeably different point along an evolution of artistic style that goes from almost as ridiculously simplistic as the walkaround models to a much more complex set of objects that somehow fall right smack in the Uncanny Valley. This is not to say that the game itself isn't pretty; it's gorgeous at points, but it's just so wildly inconsistent that it fails to have a coherent feel. And it's nowhere near revolutionary; hell, Riven completely blows it out of the water, and that was released in the same year.
The much-lauded story fares better, since it at least has a consistent tone. It's difficult to follow at points (and let's not even get into the massive orgy of self-reference that are the spinoffs,) but it's not really bad. It's just nowhere near as good as it's reputed to be. Serviceable, definitely. You could even call it reasonably good. But it is not the masterpiece that people seem to think it is.
Given this, my reactions the first time around generally fell between "meh" and "this is not really all that great." But looking back on it a few years after my initial disappointment, I think much of that stemmed from the disappointment itself, and not so much the game. It's not the best game ever, it's not even the best JRPG ever, but it's not actually a bad game. It's even pretty good, although the gameplay is, frankly, rather bland (seriously, have completely-customizable character mechanics ever been a good idea outside of Elder Scrolls games? FFVI made it work, but only just, and FFVII's system is even more generic.)
So. Bad game? No. Good game? Yeah, more or less. Revolutionary masterpiece? Definitely not. Overhyped? Hell yes.
