I agree completely. It seems like the City of Ancients and going up Northern Crater are still very very related, in that you're still just chasing along after Sephiroth. Aeris's death is a circumstance that happens along the way, and while it is an important one, it doesn't change the entire perspective of the game as much as Sephiroth summoning Meteor.

(I'm going from a narative point of view, and ignoring the fact they probably couldn't have fit the extra data on Disk 1)
Would it really be that much extra? Although there is a lot on disc 1, and I suppose moving more from disc 2 would further imbalance it, if it was even possible.