For the life of me, I can't even hazard a guess as to why we're discounting Advent Children and Dirge of Cerberus from the equation. They are both direct sequels of the events in VII, both canon and, despite what people might prefer, they both count towards the story of Final Fantasy VII. To me, it's just painfully obvious that humanity was deemed as something good for the Planet. Midgar is still full of people in both games, so it obviously wasn't completely destroyed.
Unless I'm missing something from reading this discussion, I'm happy to continue with this opinion.
The way I'm looking at this thread is how I interpreted the ending from when I first finished FFVII, which was years ago, before AC & Dirge were even planned. It was the first game I had for the PS1, so it's pretty easy for me to remember.
That's how I'm looking at it anyways.