Over-rated as a game on its own objective merits, especially when viewed by today's standards? Sure.
Over-rated as the experience it was at the time of its release? I honestly don't think so. I worked at a game store when FFVII was released. There was a lot of excitement about the game, it was perceived as ground-breaking, and people really, really liked it. It was one of the first RPG's in 3d (in terms of being polygon-based), it had far higher production values than anything at the time, it had far more rendered scenes than anything else (of any genre) at the time, and all of those technological firsts combined with a dark, complex, and engaging story created a level of immersion and investment that a clear majority of RPG players had never experienced before. And, thanks to the giant advertising campaign that came with the game (which dwarfed anything done previously for an RPG release), it was also the first RPG, ever, for a lot of new players who were brought to the genre by that game.
All of that is why FFVII remains so beloved. And, in my mind, those are perfectly legitimate reasons. FFVII provided an experience for a lot of people that no other RPG has ever matched (and, probably, that no RPG ever could). A game is an experience and a memory as much as it is a bunch of code on a shiny disk, and FFVII was an experience for the genre that is hard to really grasp if it didn't resonate for you the way it did for so many others.
And, this is all coming from someone who has always preferred FFVI (III at the time).
I agree with a few of your point's and totally disagree with others, was FFVII ahead of it's time on graphics ? and CGI ? No doubt, did SE masterfully advertise the game ? **** Yeah! Was the story complex and engaging ... This is where my difference begins, FFVII had a good storyline, but a complex and engaging one ? Nope, nothing leaps and bounds outside of what was already done, or what was being done at the time, the game started strong, i loved midgar and leaving it and w/e, but once you got to costa del sol, the game became less engaging, and more, go to X follow sephiroth's clone, then go to Y do the same, then go to Z and repeat, the game mechanics where improvement's of mechanics already in place in FFVI, The limit system was in FFVI, they just improved it(and props for that) the materia system, is an improved system of the esper system in FFVI.
Did FFVII introduced a lot of people to the genre ? Yes it did no doubt, but so would have done so any other game in it's shoe's, If they had released for example Xenogears(Considering that most people hate it for dics 2 and that only happened because squared pulled resources from the xeno team to finish FFVII) instead of FFVII as their flagship ****** for the PSX we wont be having this conversation, since xenogears( is the best game out of the two, in any category, more so in the storyline department wish to me atleast is what make's a good RPG.
To me FFVII was a good game that was delivered at the right time, considering most of us are biased based upon what game we played first, for an example to me EQOA is the best MMORPG i have played based on the fond memories i had with it, and the sense of newness(Made up word?) i had at the time, and even i can say FFXIV is better than that game, but it dosent do the same for me, another example would be FFX, the first FF for the Ps2 era, many people love that game to death, to me it was a great game, but it was so meh! at the same time lol
Either way, to me FFVII is an epic game, just not "The" Rpg of all times hands down, in all perspectives.