what happens to reeve?

[Squall of SeeD]

When Reeve gets 'arrested' by Scarlet and Heidegger, right before the crew parachute into Midgar. Reeve gets all fuddled 'cause he's trying to talk in his formal 'Reeve voice' to the Shinra guys, while using his hillbilly 'Cait Sith voice' with the heroes. Barret even says, "You're busted Reeve!" once it's clear that Shinra's going to arrest Reeve for aiding the people he's supposed to be spying on.

Actually, you've got that a little bit out of order. While true that he gives his identity away by accidentally using Cait Sith's Kansai dialect with Scarlet and Heiddeger, and his own Kanto dialect with AVALANCHE, Barret doesn't say "You're busted, Reeve!" in regard to him being arrested, but, rather, in regard to his identity being revealed. Note that Reeve was trying to cover up his slip-up before Barret said that, and immediately after, Barret says ""Too late tryin' to hide it now...." It's still a couple of minutes after that before Reeve gets arrested.