People never seem to be able to fully grasp this game. I'm not entirely sure why... but I have some theories.
- The story is very rich and incredibly deep... but it is told in small segmented pieces that make it difficult for players to digest and retain the information they learn throughout the game.
- The characters, especially Cloud and Sephiroth, are constantly changing their opinions throughout the course of the game. For most of the characters this is because they are discovering the truth in fragmented pieces, as you are. Therefore they develop and express theories that are untrue because they do not yet know the whole truth, same as the player.
- Hojo is a bastard. He has performed an innumerable amount of experients on a variety of people for a variety of reasons. Forget the ethical conflict... the problem this causes is that of these hundreds of experiments, any number of which can be successful, incomplete, failures, or suspected failures. It makes it very difficult for players to keep SOLDIER mako experimentations and Jenova Reunion experimentations seperate, especially if both are discovered together... as they are in Nibelheim.