Honestly, I don't really remember grinding much in my first go of FFVII. Although, I'm not gonna say that first fight with Sephiroth was a breeze at group level Lv. 40~ (when compared to max level). It was certainly do-able, though. Grinding only really felt necessary if I wanted all of the optional stuff (Knights of the Round, defeating the optional super bosses, the 'Omnislash' Limit Break, etc).
On the other hand, it has also been a really long time since I played FFVII... for the record.