What does Materia have to do with this argument as a whole? What about in worlds with white mages? And that still doesnt say why it doesnt work everytime. Aerith died from a wound, didnt she? So why didnt they just cast Life or Revive, or give her a Pheonix Down.

When the game says they're K.O.ed, that's a lot more important than your opinion on what their status is. And Rye is right.