When holy hits, instead of destroying meteor, meteor sucks in the magic, becoming more powerful. Then the Lifestream comes out, and stops meteor. My guess is that holy was simply a 'tracker' for the Lifestream. And Red XIII... My guess is that that section was just there to show that Midgar was never repopulated, and the planet reclaimed it. But who knows how he had puppies. He was the last of his kind... and he WAS a male, or else Hojo wouldn't have tried to mate him with Aeris.... Unless, of course, Hojo knew something about Aeris that she didn't tell us all. *grin*