Actually, the merger is what finally green lighted the Compilation of VII project. While Nojima and Nomura had been talking of the film idea it actually didn't start production until 2003 after the merger specifically which is the same year Sakaguchi resigned. It should also be noted that Sakaguchi formed Mistwalker in 2001 when he was still technically employed by Square.

I don't think you can pin the Compilation on him since he's not actually credited in any titles and because he was more involved with getting his own company started at the time. Its also incredibly difficult to discern what he actually did for X-2 since it was developed in a year and his executive role was questionable at the time. The last title we actually have evidence he worked on was Kingdom Hearts and that was him mostly giving Nomura advice that KH needed o be a grander project on scale of FF.

On Topic: I feel creatively, part of the problem with SE is that they are trying too hard to make this a business by trying to franchise out titles. I have only played a handful of titles since the merger that I feel really capture the appeal I had for Square back in the day. I feel SE has not only created for themselves a creative slump by letting talent leave (Gears team, Chrono Team, and Matsuno) but they also choose not to actually bolster up and give proper PR to the original IPs they do have. Both Mana and Front Mission have suffered sales abroad from SE's total lack of promoting such titles. On the other hand, the Compilation has been terrible and the Ivalice Alliance has been hit or miss.

Their most creative products are usually small scale like TWEWY and Sigma Harmonics and I feel the major projects are trying too hard to appeal to a western mindset which is kinda silly since these western mindsets bought all these Japanese mindset games for years but suddenly now we don't like it? I blame a majority of SE's problems on Wada and the people who supply him with information.