Yeah, Wall Market (and especially the Honey Bee Inn) is a strange place in FFVII. Sure the game is full of silly moments (Elena cartwheeling down the slope in Icicle Inn or the Slapping contest between Tifa and Scarlet), but the Cross Dressing sequence really stands out; partly because it is never mentioned or referenced again, other than talking to the manager in front of the Honey Bee Inn. Also Don Corneo, a man who sees women as slaves to satiate his own needs (and later on just straight up kidnaps them for his pleasure).
And speaking of the Honey Bee Inn. We are litteraly seeing a brothel in a "kids game". Cloud can get in the bathtub with a bunch of muscular guys as already mentioned, sure. But he also peeps through keyholes to other visitors' playtime. Iirc, it's even implied that President Shinra is one of the visitors cosplaying with a girl!
And if you thought all that was wierd, and how on earth could Square let all this stuff into the game; whoo boy, the alpha version (I guess) of the Honey Bee Inn was even more direct than the finished game. The Honey Bee girls would talk with "Limit Break"-text (flashy rainbow colours) implying seductive speak. Both the Shinra Manager (Guy in red in early game) and Palmer would have a discussion over the use of the Honey Bee Inn, and be surprised they both have the same favourite girl. When peeping through a keyhole a black screen with the text "we apologize, but the following contains materiel unsuitable for the general public" appears. And to top it all of, if you would not have recieved either the Bikini Briefs or the Lingerie; you would be able to talk to a man who practically admits to be stalking Tifa (why he's there now, as she's supposed to be "working" there), and stole 'her' underwear from the clothesline outside the 7th Heaven. The Mystery Panties: Panties with a childish design on them. Childish from the 7th Heaven? Yuck!!
Good thing some of the higher ups told Toriyama (event-planner for the Honey Bee Inn) that stuff was way too across the line.
All that said, Wall Market is one of the most memorable moments in the game,
because it's so out of the left field, and I would be very sad to see it cut if that were to happen. (I think SE confirmed that it will be in the remake.) And Mukki (Leader of the muscular men) is really one of the nicer npc's in the game the few times you can meet him to talk with him, so I hope he gets expanded on a bit in the remake. Yeah, I said it, give us some more of Mukki!
If anyone is interested in the Alpha version of the Honey Bee Inn, then I can recommend Shademp's (Thelifestream.net) Unused Text series part 4. It does have some cool unused areas designs; some of the dialogue scenes were just too much and had to be cut.
https://thelifestream.net/ffvii-the-original/final-fantasy-vii-the-unused-text-series/part-4/