Sorry to go way back to the beginning here, but Puzzle, why would you associate the 'red fire' with Sephiroth? The only times in FF7 I can think of flame being connected with him are calling Meteor, obviously, which while accompanied by fire in the sky is hardly a cloud of any sort (unless 'rock' is a type of cloud), and the burning of Nibelheim, which, well, was more of an unexplained but Sephiroth-originated phenomenon of total destruction than what seems to be a mostly harmless cloud. Only 'some parts' of Crola's house were even burned.
Unfortunately, I'm not quite so good with my other FF villans (I never played FF9, and didn't finish FF10; I really need a better gaming system than a PS1), so I'm not sure who it actually would be (if it's a player rather than flavor), but your conclusion seems a bit off to me, and while looking for the wrong guy isn't critically bad, it can hardly help.
Okay, how's this for a theory on the Moogle thing. What if the red fire was someone trying to harm (or otherwise target) Crola, and turning into a Moogle was a side effect of protection? I know I've seen roles where the protect-ee would have a kill reduced to a 'knockout' (the exact effects of which typically included not voting or speaking), and this seems similar, but otherwise this is just a fairly random thought. I do know that you couldn't turn people into Moogles in FF7, so the ability isn't from that game.
My theory on the BabyJesus thing: Lynching him Day One is habit-forming. It's like letting IS live or treating someone as a confirmed innocent: once you've started, it's hard to go back even when you should. Should this be one of those times, well, there's really just one way to find out.
To be Continued...
