VII certainly set the bar for Playstation games. It was pretty much unparalled in terms of scope and grand storytelling at the time, what with the new storage medium and lots of FMVs.

Revolutionized is a pretty strong word. I think VII really had a pretty big impact for its time, and there likely wouldn't have been nearly as many RPGs on the Playstation if it hadn't been so successful. I think it took the series in a new direction as well, but that's not really revolutionary. If it revolutionized anything, it was probably the depiction of protagonists. Cloud really started a longlasting trend of heroes with megaspiky hair.