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I understand the intentions of the dialog. My point is that the scene doesn’t indicate anything in particular beyond Squall having perhaps heard the name before to someone who is playing the game for the first time.
That is the beuty of FF games, at least most of them especially this one, you don't get everthing the first time.
I don't know how many people do this, but I often had more than one saves at a time, I would get so far with my first save and when I got stuck, I would either take a break with another game, or I would start this game at the begining on another save, to (a) enjoy the game threw up to the point where I got stuck, (b) See if I missed anything and (c) see if by some flute, I could be stronger by the time I got to that point and continue there.
When on my main save I saw the orphange scene, I was facinated, it was one of thoes moments where I could have just shouted OMFG (In full) there and then. I contiued a bit and (I can't remember if I got stuck, or just decided to) I stopped with this save and looked though some of my older ones, to see if anything linked up or hinted to this moment, the mention of Edea's name was the first I noticed, that's probably why I was able to explain it better than the other ones, as it was the first and I've had time, it's easier to explain, because it is easier to understand.