Some is not all. The was also the 3DO console, The Sega Saturn etc. If so many devs wanted to escape Nintendos grasp they had options even before Sony came along.
FF7 would of fitted since the was also the 64DD add on that was being released. Also look at Resident Evil 2 that game needed 2 discs on PS1.
Moneyhatting is how Sony got in this industry.
Sega Saturn and 3DO never took off. PS1 was selling decently and was actually a viable alternative to Nintendo.
64dd add on came out only in Japan, in 1999, two years after FF VII released. Most games wouldn't have fit even on two N64 cartridges that could fit on just one PS1 disc. Also CD had way better audio output which was important in games like Metal Gear Solid. And after a while as Sony pulled ahead there was no need to consider developing for the N64 anyways. Business one o one.
Sony got in the industry for not holding back technology and developers like what Nintendo was doing.