It's true, Final Fantasy VII's graphics are the aspect of the original PS1 game that have aged the worse--but naturally will be the biggest improvement in the upcoming PS4 remake! However, while I also prefer the sprites of the SNES's classic JRPGs--the sprite approach to graphics were taken as far as it could be by then and the shift to the more polygon style of the PS1 and the N64 was a necessary stepping stone on the road to the sheer realism of modern games' graphics. (Seriously, graphics could advance no further than they are today and I would be perfectly content with that freeze!) In particular, sprites (which were fantastic for traditional side-scrolling, top down, etc games of the past) could no longer cut it with the transition to the truly 3D gaming of the N64. Many of the games of that transitional era suffer from the then limitations of that then-new-but-ultimately-promising approach to graphics.
As for the occasional wacko moments of Final Fantasy VII's story: I can overlook the silliness of Cloud cross-dressing in a brothel, Cloud's date night, etc given the general strength of the broader story. I grant you that Final Fantasy VII's story pales in comparison to the likes of Chrono Trigger, Final Fantasy VI, or Final Fantasy Tactics--but on the other hand it is preferable to the hot messes that are the Final Fantasy games to come! Honestly, in my opinion the biggest flaw in Final Fantasy VII's story is a lack of an explanation as to why Aeris can't be simply resurrected with a Phoenix Down!
As far as Final Fantasy VII's flaws go, I'm considerably more annoyed by the dangling threads of elements abandoned in the final release (presumably cut to meet some arbitrary deadline): the toy soldiers that serve no purpose, aborted methods to resurrect Aeris, etc. That, and the Japanese edition of the game had an ATM mechanism missing in the North American release--which even included a secret card linked to an account with infinite funds, talk about a fantasy!
However, despite those flaws: I considered the game to be the bees' knees, spend many hours playing it, and it was also one of the main reasons I bought a PS1 back in the day (along with Final Fantasy Tactics and the Resident Evil series). Is it the greatest JRPG ever? No! Is is a great JRPG regardless? Yes!