Truth is FF7 is pretty god damn overrated, but back when it was new it was hard to feel that way. This was before the advanced graphics and whatnot we have today, so FF7 seemed awesome based on the prowess of it's sexy prerendered backgrounds and FMVs alone. It may seem strange to the younger generation, but FMVs were a pretty big selling point once upon a time, combine that with a story that... well... is a story, and it's all the better.
Basically my generation liked FF7 for reasons that are inconsequential now, it was a decent gaming experience in the day, so huge nostalgia factor. Then like everything else the older generation loves, the younger generation hops on to try to feel relevant, and now you have people thinking FF7 is one of the greatest games of all time.