First off, DON'T make it an anime. Too cutesy. Most of the suggestions are good but here's my cast list (note: this is purely theoretical. I'm not saying this would work in real life.)
Cloud-Orlando Bloom
Barret-Mr. T
Tifa-Jennifer Garner
Aeris-Natalie Portman
Red XIII-voiced by Val Kilmer
Cait Sith-voiced by my suggestion for Reeve
Vincent-Johnny Depp
Cid-Kiefer Sutherland
Yuffie-Mandy Moore
Sephiroth-James Marsters (Spike from Buffy)
President Shinra-Brian Doyle-Murray (Noah Vanderhoff from Wayne's World)
Rufus-Leo DiCaprio (After all, he did play a con artist in Catch Me if You Can.)
Heidegger-Robbie Coltrane (Hagrid from Harry Potter)
Scarlet-Michelle Pfeiffer
Reeve-Benjamin Bratt (I've always visualized Reeve as being younger than Kevin Spacey.)
Palmer-Danny DeVito
Hojo-Hugo Weaving (Agent Smith from Matrix)
Reno-Marshall Mathers (aka Eminem)
Rude-Vin Diesel
Tseng-Rick Yune (the Asian guy from The Fast and the Furious)
Elena-Brittany Murphy
Don Corneo-Rodney Dangerfield :D
Bugenhagen-Mr. Miyagi from Karate Kid
Shera-Sandra Bullock
Lucretia-Kate Beckinsale