Yeah, Cloud would definitely be more stable and that would undermine... practically everything. Seph wouldn't have the golden opportunity to fuck Cloud over that he had in canon; in canon he was able to break Cloud because (1) Cloud was traumatized and had made false memories, and (2) Tifa remembered what he didn't, and doubted him. If Zax survived, Cloud wouldn't have needed the false memories and Tifa never would have had to doubt. :D

Plus, yeah, with Zax as an ally they would just own everything. XD

Oooh. Your AUs sound intriguing. :3