It's a reference to another game Square was developing at the time FFVII was released: Xenogears is a RPG where the main characters often battle in giant mecha called Gears. Like in Sakura Wars, the Gears wield a larger version of whatever weapon that character prefers to use in hand to hand combat. A very dense and complex plot that is very heavy on religious allegory and symbolism. It's a cool game and also the spiritual predacessor of the Xenosaga series.
Here's Cloud's exact quote:
Cloud seems to make a lot of excursions into other Square games, both mentally and physically."Uh...aaaa....? A billion mirror fragments.... small.... light... taken.... angel's... singing voices... zeno... gias..."
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