Just thought id post here to let anyone know that is having the same problem that they are not alone.
Before i upgraded to 3.30OE i had 3.03OE with the 3.02OE Plugin and FF7 Worked perfectly, after upgrading, the graphics were better, and less minor glitches, but i realized after i had to restart the game about 10 times that it was the firmware. This is what i got:
This only occured after fighting, and it actually started glitching WHILE fighting, usually the sound would slow down and get unstable, but this time only the graphics were messed up and i could if i wanted to go on through the game. Now after re-downgrading back to 3.03, All of this went away.
Just putting this out there for the people that want to play FF7 on 3.30, letting them know that it may or may not work, and in my experience, i doesnt and is unplayable, especially since it seemed it was random in glitching, it would happen on totally different enemys and under different circumstances.