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As far as Japanese over the top confusion can go, Rebirth is very light in this respect. There's a couple of ways this can go and they are not that far out there, compared to many other stories. It's not Kojima level WTF or anything like that. I guess the Kingdom Hearts guy just wanted add some zigzag in to the FF7 mix. Or maybe they wanted to revamp it a little bit so that even us OG fans would not know exactly how things will play out. And they can have more characters around for longer.
I think they know exactly what they are doing, they are simply hiding their cards just enough so that at this point nobody can *really* nail the whole thing down in advance.
In general, I'm not a big fan of multiverses or alternate realities and timelines, because they tend to destroy any real stakes and add unnecessary complication. However, I'm blinded by my love for this game so I'm just taking it and smiling all the way.