1/You must open your ISO ( not the eboot) with CDprog
2/Changing the battle model:once ur inside the iso browse the folders until you find BATTLE6 (or something like that, anyway its the last battle folder) u'll find a file named CLOUD.LZS , right click on it > insert file , now choose the modded cloud.lzs from lazy bastard
3/Changing field model: now go back in the main ff7 iso directory, u'll see a FIELD folder, go in , find CLOUD ( i dnt remember the extension but there is only one cloud file in this folder u wont miss it), right click on it > insert file, and choose the modified cloud field model from lazy bastard mod
4/Changing the world map model: same as above but in WM folder instead of FIELD folder, there is 2 WM folders if i remember u have to find the one with WM0 , thats the name of cloud world map model , ther two others are tifa and cid
5/ Close CDprog, convert your modified ISO in PSP format and ur done
This mod was the very first PSX graphical mod i saw, I could never release mine without the knowledge from his edited files thats why i remember it even if im not a big fan of cloud
This may be look tempting for a beginner to mess with the characters with CDprog but swapping already modded files is one thing, while editing them to be playable cant be done without knowledge in hex editing. But you can still swap sephiroth.LZS ( his battle model) with Cid for example, u'll have a playable sephiroth instead of cid BUT this the ' easy way' because he'll have cid 's limits break (it will be buggy) and since he will not be edited he will lack advanced animations like 4*slash, and he wont have a field model (he have an existing battle model but the field model is compressed with many other npc, so unlike cloud and his team u'll never find him in the field folder) But at least you'll have a modded cloud and a playable sephiroth in the same party, without any hacking knowledge, thats better than nothing.
I had a fully edited and playable sephiroth who could replace cid and barret in term of compatibilty, for field and battle, but my hdd crashed some month ago and i lost these data, the sephiroth from my actual uploaded mod is the real one,meaning he is not compatible with any other characters except maybe aerith, and more than that its an auto installer so its impossible to get 'only' him, so like i said ur best bet would be the easy way, by swapping only his battle model with another team member
Edit: you can change his portrait too, in the MNU folder, if, for example, u swapped cid with sephiroth in battle , and u want him to have his portrait , u have to exctract sephiroth portrait, right clik and extract the file who looks like zephiros.MNU or sephiroth.MNU i dont remember well, then go on cid.MNU and insert sephiroth 's portrait. I think thats all about the basics with cdprog