I've seen Sephiroth use Life2 on cloud before too many of times and cloud gets 1 hit KO'ed. While I seen this as a point that Sephiroth was clearly the top character in SOLDIER I now look at it in a different way.

When you hear Cloud talk about Sephiroth he says that he was a hero. Even in crisis core he is known to be one for a limited run. That explains the Revive materia in my over-thinking mind. Plainly its just an awesome materia and makes up for having a level 1 cloud that dies. Imagine how much more painful it would be just to carry on with a dead Cloud and Sephiroth. Kalm flashback is tedious enough as it is.

The fact that Cloud could have possibly imagined the whole scenario makes perfect since. However he did mention that he was no match for Sephiroths skills. This is a good hint that Cloud still knew his skills and abilities even though he was placing himself as Zack. Who according to some, was more on the same level as Sephy. Cloud clearly kept part of his story true in how weak he was even playing the role of Zack.