I never worried about reputation in VII, but I seem to remember you could still donate at temples and, it might not get you as high as respectable anymore, but at least a grey neutral would turn green. I don't recall it affecting shop prices enough that it would be worth it, so as long as my reputation was very good in Stone City I still ran around killing people and getting thrown in prison.
If I remember right, you didn't even need a good reputation for advancing in light magic. I wouldn't worry about it too much, especially considering you only get credit for it over the area of the specific map where you did the good or bad deeds.