This is possibly the most powerful glitch in Final Fantasy VII.
First of all, the Yuffie Warping Glitch only works on the PC version, on both the original 1998 version and the 2012 rerelease, and it was originally discovered by Neohart (http://www.twitch.tv/neohart).
Triggering the glitch is rather simple.
Die to a boss or a field encounter (a field encounter is a battle outside of the world map), load ANY file saved on the world map (it does not need to be the same file on which you died) and go recruit Yuffie. The Mystery Ninja encounter does not nee to be the first battle after the Game Over, however, you may not leave the world map.
The Forest by Rocket Town you can see me run through in the video is the only Forest on the worldmap that allows to encounter Yuffie almost all the time (255/256 chance of a Mystery Ninja battle).
As soon as you have defeated Yuffie, depending on what you did before your Game Over, one of the following two events will occur.
[A] If you died to a boss or in a scripted battle, that very battle will follow, which is what you can see in the video as well.
[B] If you died to a random field encounter, on the other hand, you will be teleported to the field you died on but the battle will not be retriggered.
The consequences are obvious.
As shown in the video, one can beat FF7 without having to beat most of Disk2. In fact, in case one were able to beat the final bosses consistently (Slots), one could make use of the Yuffie Warping Glitch to beat FF7 while being even still on Disk1.
What is more, the Yuffie Warping Glitch has tremendous ramifications on Perfect Game files.
It is now possible to obtain 99 Cosmo Memories and probably also 99 Seraph Combs.
Additionally, one does not need to use up the Omnislash Limit Break manual in order for Cloud to learn Omnislash as he will learn ALL of his Limit Breaks if one uses Yuffie Warping to fight Safer-Sephiroth.
This is arguably even more useful as not every field has a boss battle, however, there might still be random battles one can use to trigger the Yuffie Warping Glitch.
You can, for instance, go back to places you can no longer visit, including Gaea's Cliff, which would make Trine a non-missable Enemy Skill.
Also, you can go back to the Shinra HQ, the Sister Ray, the Temple of the Ancients, the Whirlwind Maze, ...
As a result, almost every formerly missable item, materia, piece of equipment etc. might not be missable anymore.
Given the aforementioned implications of this glitch, it may very well be possible that the Yuffie Warping Glitch has an even greater impact on Final Fantasy VII.
By all means, if you own the PC version of FF7 and explore Yuffie Warping, please share your findings with me.