Jenova would want Cloud to forget, for the same reason she decided to look like Sephiroth, she was manipulating him.
Err, I'm no psychiatrist, but Cloud was quite definately insane. To be honest, probably more than Seph.
Cloud was asleep at the time, he wouldn't have put up much of a fight.
I think Hojo injected more than usual, or possibly it was because he did it in one go, or... err...pass.
