Aeris' development lies in the fact that she learns to accept her role, to let go, to stop being afraid. Her rating, I guess, is based on what's done with her character while she is on screen, relative to how much/little other characters develop with the time they are allotted.
Sephiroth's development makes sense. He is his own person. The pre-psychosis Sephiroth shows signs already of becoming post-psychosis Sephiroth. Clearly his story has its own flaws, but as far as FFVII goes, it's the most defined, and fits the character best.
THE MAJORITY OF CLOUD'S STORY ISN'T EVEN HIS OWN STORY. It's a great idea, a great PLOT DEVICE, to have his personality taken over by Zack's memories, but that doesn't make Cloud a well-developed character. He has no character. Even if he breaks through the barriers and retrieves his own memories and all that, it doesn't revert him back to a state where he is his own self. He may remember correctly now, but his personally is still infused with Zackness, and everything he does after that point can still be seen as merely what Zack would have done.
Subtle or heavy doesn't matter, as long as it fits, and as long as it's done well.
Good heavy character development: Ayla from Jean Auel's Earth's Children series.
Good heavy character development in a video game: GLaDOS, Kratos, Isaac Clarke, Andrew Ryan
Good heavy character development in a Final Fantasy: Celes, Shadow Lord, Cyan, Garnet/Dagger
Good subtle character development: Most any character in a Russian novel. Anna Karenina, Kostya Levin, Raskolnikov (though there are heavy aspects to his story), etc.
Good subtle character development in a video game: Garrett from Thief, Tim, Rucks (Bastion), Garrus (Mass Effect)
Good subtle character development in a Final Fantasy: Fran, Steiner, Wakka