Some great stuff here. But I'd like to remind you that this is a game and the creators most likely didn't put as much thought as you are when creating Midgar and Shinra. I believe they just needed some pretty bad antagonists to balance out the fact that the Protagonists were in a terrorist group, which means they also needed to include the side of the oppressed people living in the slums.
It kinda gets you thinking about what would've happened to ff7's popularity if it had been released in the U.S. shortly after September 2001 lol. I'm not even sure if they would've let SquareSoft release it here in the states.
EDIT: Now that I think about it, the protagonists were terrorists in ff8 and somewhat in ff9 stealing the princess and all.