You know, it's kind of interesting that some of the conversations Cloud has with the people of Nibelheim sort of hint to what really happened. Like when you talk to the guy with the camera, he doesn't recognize you at first, but when he does, he sort of quips, "So that's how it is, huh?" Which to me seems to imply that he's talking about how Cloud's just a regular grunt and didn't make it into SOLDIER.
Also, what the heck is up with going into the Item Shop anyway? Like, Cloud will just go blank and not be able to remember anything.
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"Why must we always choose between certain death and probable death?"
"I'm in an epic battle to the death, FIGURE IT OUT YOURSELF!"