I love this scene without mountains. It's beautiful. And besides, I've always seen the world map in RPGs like a a symbolic representation of the world. The game strongly hints at things this way by the way (character as big as a city, small mountain, random battles, ...). When you think of Cloud on the world map as just a piece that you move on a paper map, Pyrozen's battle scene is perfect. Because to walk from Kalm to the Chocobo Farm in reality (for example), it doesn't take 5 minutes, but weeks. There is no doubts the party met people on the way, visited unimportant settlements, and the random battles show the rare times the party couldn't resolve a problem without using brute force.
With this logic in mind, it makes sense that the mountains are so far away you can't see them, since walking up to them actually takes days.
And [off-topic] this kind of symbolism is what I think is missing from most games today. By going the realistic route, everything ends up feeling narrow. With the details allowed today, developpers work on the infinitely small, instead of working on the infinitely grand. But enough of my rant [/off-topic].