It really would have been awesome if the flashback had contributed something other than information. Maybe some way to obtain Cloud's Power Wrist. He was wearing one, wasn't he? Or Sephiroth's Touph Ring... somehow.

Here's a good idea for the whole lack of control in battle. Cloud and Sephiroth could be separated post-bridge-fall. Then Cloud would continue along with Tifa and an MP (no control of MP) and battle their way to that cave where Sephiroth makes spiel. Of course, this all relies on Cloud's stats not being ridiculously differed from Seph's or the Nibel enemies can have their stats reduced during the entire flashback sequence.