Okay, what WAS the story?
I can remember the stories from games as far back as the C64 in remarkable amounts of detail, stories are in fact the main reason I PLAY games but I can't remember, even vaguey, what the story of FF7 was about

No one really can. Final Fantasy 7's story is grotesquely incoherent. Which is actually why I love, say, XII. It's one of the only ones that I actually understood all the way through.

So its less a story and more a series of scenes that are only loosely related?

The protagonist, Cloud, was an early attempt in console RPGs at producing a mentally unstable hero with a mysterious past (which has since become a common trope in the genre). The results were confusing, to say the least.

Pretty much. The overarching story (Save the world from giant meteor) wasn't -too- hard to follow, but Cloud's various dances with PTSD and amnesia made it all much harder to follow. It also didn't help that the translation was a little on the loose side, unlike some of the later games in the series which were a little better on that front. VIII was a bit more comprehensible, I think. I also played X, X-2, and then XII. But as a lot of people are saying, VII was pretty much the first one that made JRPGs mainstream, even if it had a bunch of problems.

How far into the game was the giant meteor introduced? I genuinely don't remember that and as I said, I remember fairly mundane stories from much earlier games.
Maybe the game boring me to tears resulted in the formatting of that part of my memory, leaving me with just enough to keep me from playing it ever again...

Not to mention how it all tied into Sephiroth and the Jenova project. I never did fully make sense of that.

Right. I have basically come to the conclusion that the stories of Final Fantasy games are always easy enough to figure out when you first start, but the longer you play, the more and more confusing they get. To the point where they're absolute gibberish by the end, more often than not.

FF7 story is actually quite good for the video game standards and is just as deep as you want it to be. You can just "grind a lot and kill the bad guy", or you can take it a bit more seriously and discover a good plot and some nice characters, it's up to you.
Also, I've finished the game with Cloud on level 54 and no grinding at all... so no, FF7 is definitelly not a grind fest.

FF7 had a pretty descent story. I didn't found it too confusing (except for a few points), but it's far from the best. And the game is definitely not for everyone.
The Final Fantasy series (and each of their games) is one that you either love or hate. I'm in the former group because it introduced me to RPGs in general (I would've never been interested in great games like Fallout, Betrayal of Krondor if I hadn't played it).
About FF7, in my opinion it's overrated, but not by much. It's far from the best game in the world (as I said before, no game could be that), but it's a decent and enjoyable game.
I tried playing the PC version once, and it was so buggy that I decided to stay with the PSX version.

It's interesting to look at the early JRPGs like Dragon Warrior and Final Fantasy, which had much in common with (and took some inspiration from) early western dungeon crawlers like Wizardry, and see how the western and eastern branches of the genre have evolved along different paths.

Chrono Trigger was so good. I pretty much hated Chrono Cross, though.
To be honest, I think the only post-SNES Square game that I've played and truly like is Parasite Eve. There were a handful that were decent, and I haven't played their most recent games, but my decidedly unpopular opinion is that they made a pretty hard U-turn from awesome to pedestrian in the mid-90s.

If you hadn't played far through the game, all you would have probably discovered was that a group of rebels were trying to destroy reactors (because the reactors were damaging the planet), and that Cloud has mental issues. The plot doesn't develop beyond that for a few hours.
It was a very confusing story, and the way it unfolded during the game didn't really make sense until I read more about it afterwards. The major threads - the Jenova project, Aeris and the Cetra, the rebels and Shinra corp, and Lifestream - are all very interesting, but the way they tie together towards the end of the game isn't made very clear. The ending certainly doesn't help.
There's a pretty good summary on Wikipedia.

Well, reading that summary has only made me more confused. :)
Yeah, this is what I meant with my earlier comment about the more you play the FF games, the harder it became to follow the storyline. It always seemed that every FF game had a "kudzu plot." It started out simple enough, but as you went on, the writers just felt that they had to add more and more threads, so they kept hanging more and more stuff onto the framework, tying in more and more things which made the entire thing so complicated, the whole narrative started to sag under its own weight.
And instead of making the storyline deeper and more interesting, it just became so twisted and so convoluted that you had no idea what was going on at any given moment, and you almost just didn't care anymore. That certainly happened to me during a lot of FF7, which was a shame. VIII had a few similar moments, too. I'm not sure if this was just something that's inherent to the way Japanese video game writers do things, or what, but it seemed to be something that just plagued FF games. I liked the games, mind you. I finished them, I still consider them good games, but yeah, there were a bunch of moments of sheer WTFery when it came to their storylines.