From what I remember it doesn't really matter who you stick with in FF7 the party are always like 2 levels behind or something, there were people I never used but they were always getting levels, most of that game lies in summons, once you get Knights of the round table (Make sure you get this, although it does make the game a little easy with the X4) level it up and if you ever get stuck, with the times 4 and fully leveled it's 9999dmg about 7 times then rinse and repeat for another 3 times. Incase you do decide to change parties, there are hidden characters if you know where they are, Yufie and Vincent (<3), if you use Vincent though be aware his limit break makes him uncontrollable, and he does fire damage, I got stuck in a rut agaisnt two headed blue dragon, one had ice weakness fire strength and the other vice versa, and Vincent was in his limit and kept attacking the fire strong one and healing it -_-
I never did like Red though, and no, no one dies, if you've not had it already, I won't tell you why, but Barret has a fight later on which is a one on one, so it might be worth giving him a few decent things to till that goes by, I can't remember when it was though and if I did I wouldn't say so you can do it for yourself.
And changing materia is a bitch, the easiest way to do it, is to give the main ones to Cloud when he's able to have more slots, although later on a few weapons are slots-a-plenty, I.e. Rune(?) sword, it might have been called.
And later on when you meet Caith Sith, be sure to not give him much because something happens to him, and during his disappearance, I'm pretty sure he keeps the materia.
Make sure to pick up summons though, some of them are just lying around in the middle of no where. Later on you'll go in a forest, and in there there's one I originally thought was a glitch on my TV =( turns out it was a summon when I decided to probe it.
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