To put it another way, there are two types of "canon" here. Those who accept The Compilation, if that is what you prefer, then good, The Compilation is official and thereby canon based on that but nothing more. And if you don't accept The Compilation, the 1997 FFVII isn't erased because The Compilation is around, the game was never unfinished, it was a complete story on it's own.
I don't understand this. There is only one canon, and that is the canon that SE has established.