Not in the same league as FFVII
For starters, the combat system, which is sortof fun in the beginning, just has no crunch to it. It doesn't feel solid to me. Click the appropriate offensive move and an automatic animation takes over. Sounds like classic RPG, but it''s just not satisfying. You have to do this over and over again and it just feels repetitious.
The storyline is just weird. The new characters the game introduces have no depth, and the world itself is so drab and boring that it felt nothing like the world of FFVII. I suppose you could blame that on the PSP's graphics, which have absolutely no detail to them. I loved FFVII for it's detail. It made that world come alive. I feel like this game adds nothing to that universe and really isn't very connected at all.
In the end, I didn't care enough about this game to even finish it. I think it's a case of the hardware not matching the vision of the game. It's not that its a bad game, but there's nothing to recommend it beyond the cutscenes.