OK, this game starts out in a city built on two levels - an upper level for the rich and a lower level for the poor. The whole city is run by a company named Shinra. Cloud is hired as a mercenary by a group of eco-terrorists called Avalanche - but they are mostly nice people and include Cloud's childhood girlfriend, Tifa. One of the missions goes bad, Cloud gets separated from the rest of the group but meets Aeries (sp?) - setting up a love triangle.
Not long after that, Tifa is taken prisoner by a crime boss to be his sex slave. Cloud and Aeries rescue her by applying to whore themselves out to the same guy (which is where Cloud's cross dressing comes in) then, when they're in the room with him, turn on him and threaten to smash/crush/cut off his balls.
They escape, only to find that Shinra has figured out roughly where Avalanche is hiding. Instead of attacking directly, Shinra decides to simply blast one of the pillar holding the section of city above Avalanche's neighborhood. Avalanche goes to intercept them but, with Tifa and Cloud late to the party, they get slaughtered - and pretty graphically, too. The pillar comes down and an
unforgettable cutscene plays.