I'm new to this thread so I apologize if I'm treading old discussions.
Regarding the potential of Midgar, I think there's some plot holes as to whether or not it could happen. In KH2, when Cloud/Sephy disappear after Sora beats him, he asks Tifa where they went. She comments (and I don't have the quote in front of me) that they probably went back to their world.
Which, one would assume that would be Midgar. HOWEVER, Squall or Cid or someone mentions at some point that Hollow Bastion is their home. But then Tifa's line wouldn't make sense, because the Sephy encounter took place in Hollow Bastion.
So either Midgar happens and Hollow Bastion wasn't there home, or Tifa's line didn't line up. I suppose the third alternative is that Cloud/Sephy come from a different world than the other FF characters, but then the whole Cloud looking for Aeris in KH1 (and finding her in the credits) wouldn't make sense because it was already stated that she came from Hollow Bastion.
Would still love to fight Shin-Ra heartless, despite the plot holes.