At the end of the game Leon, Yuffie and Aerith all mention that Hallow Bastion was their childhood home. That implies they were raised there. Which doesn't give much space for them to be from a different world.

The same would naturally apply to the children on Destiny Island. I know that just because the worlds weren't in the game doesn't mean they don't exist, but with the explanations given throughout the game it isn't plausible to say that the Final Fantasy cameos were actually from the world in their respective FF titles. Kingdom Hearts is simply a different game that used Final Fantasy characters that have no relation to their original games, worlds or plots. The only reason the Final Fantasy characters were in the game was so that it'd appeal to SE's fans. They could have asily used original characters to replace the Final Fantasy cameos.