Welcome to the Forums Anakin. We will be watching your career with great interest...
Please don't bring back dead topics like this if you don't have something to add to the discussion. It's in the
rules.
Yes .lzs files are compressed. If ficedula's app isn't working for you (makes sense--it's designed for files from the PC version), the only other one I know of is a tool written by M4v3R. I can't find a working link, though, so you'll just have to hope he posts one (no whining/begging, please. I don't have it.)
the highly detailed Cloud and half-Jessie models are never used in the game.
that model was used in the scene where you and Jessie are standing in front of the monitor, and she explains the Midgar rail system to you. I've seen it in the PC version, using I believe Ifalna. There is one of Cloud in the same scale.
After a quick Techdoc consultation, it looks like Contra is correct. Here's proof:
The train monitor location is rootmap.
rootmap loads the following two 3D models:
clgd.hrc -high res. Cloud
cmde.hrc -high res. Jessy upper torso