Umm, there are other FF games, you know.
Actually, I have started using (in 3e) a Chrono Cross type of world, with bits and pieces of FF7, FF8, and FF9 thrown in. I know it sound complicated, but it works. Anyways, my opinions: 1. Obviously, certain materia can only be used by certain classes (at least at low levels). For instance, all summon (red) and spell (green) materia could only be used by mages, with exception for curing spells and summons, which could be used by clerics. Most other types of materia could be used by all classes, with the exception of some command (yellow) materia, which depend on the class. 2. Slots all the way. Of course it would cost extra to forge a weapon/item, etc. with slots. 3. Well, IMO, breaks are a combination of critical hits and beserker rage. 4. I`m not entirely sure what you mean by "saga", but I suppose you mean the time when Sephiroth returns. If that is the case, it depends on the level of the PC`s and the amount of involvement you want them to have with Sephiroth. I would choose the first one. That way, you could choose to go the same route as the game (put your party in place of Cloud`s) or have them face off against other baddies, or whatever.
Hope I could help, Highlander