This arguement has been going since the game was first released, with all kinds of stupid theories being made up by fans on the subject (the most infamous was the ‘Holy Kills Humanity’ one, which was, of course, completely invalidated by Advent Children and the Compilation.) Holy is the Ultimate White Magic – it’s essentially the power of the Planet. Hence, it’s not up to the spell’s caster to decide how the spell functions – it’s the Planet itself who decides that (it’s what Bugenhagen mentions, which was the source of that stupid theory I just mentioned).
Besides, Holy’s very reason for existence is just as a counteragent to Meteor – the Ultimate Black (or Destructive) Magic. So therefore, Holy is merely a counterweight to Meteor, rather than a ‘magic of mass destruction’, and so is not by nature an ‘offensive’ spell.
These are the facts as they’re presented in the game and in related official documentation (ala, the Ultimania guides, info from which in most cases I would take with a grain of salt), so if you’d like to argue about it, go ahead. Just be aware it’s an arguement that would be rather one sided.
Holy only had the opposite effect because Sephiroth’s strong will blocked it from ‘doing it’s job’ for so long. By the time it finally was able to activate, Meteor was already hovering above the Planet and had gotten too powerful and was essentially absorbed into it. So it’s not a question of whether Holy was a destructive spell – it’s White Magic after all and traditionally White Magic’s very nature is to heal or nurture – in fact, in the very first FF game Holy-elemental spells would only damage undead entities, which is the opposite of life. Hence, in the same way, in FFVII Holy (‘life’ in a sense) is the opposite of Meteor (essentially, ‘death’). As well, I don’t think Holy actually shielded Meteor, more in it tried it’s hardest to stop the Meteor, but it was just overpowered (that’s why you still see it swirling around Meteor, attempting to destroy it without success).
As for Aeris, why would she want to do that? Using Holy in such a way is ultimately perverse and anathema to someone like her who is kind and gentle and only desires to heal and help others. Aeris cast Holy because that was what she had been taught to do by her mother – it was a directive handed down through the Cetra for thousands of years with the White Materia, as the Cetra knew ultimately, Jenova would eventually escape and threaten the Planet.
To paraphrase Bugenhagen: "When the time of Calamity comes, Holy must be called." Even Cloud realizes that Aeris knew all along what she had to do – only she alone could cast Holy as she was the final inheritor of the Cetra’s history and wisdom. No one else could do it. It’s also the very reason for Aeris’s demise – even Sephiroth himself knew that as Holy was meteor’s counteragent, she alone was the only real threat to his plans so he strove to eliminate her before she could do that. Unfortunately for him though her prayers had managed to reach the Planet before she met her destiny on Masamune. 😉
And besides, the Planet does protect itself in the end – why else do you think the Lifestream erupted out of the Planet to destroy the Meteor in the final moments of the game? This is even clearly mentioned in Advent Children during Marlene’s monologue at the film’s beginning (Ironically this was exactly what Sephiroth had aimed for all along – he didn’t want to destroy the world itself, just threaten it’s existence, knowing that doing so the Planet would use the Lifestream to defend itself in exactly that way, which he would then absorb at the nexus point of the Lifestream’s energy to ascend into godhood. That last point seems to be overlooked or forgotten though by most fans, simply preferring him to be a mindless megalomaniac who just seeks destruction, despite him clearly mentioning this was what he was planning on accomplishing even back in disc 1 at the Temple of the Ancients).
As for ‘manipulating the Lifestream’, I seem to recall that in Advent Children Aeris did actually consider using the Lifestream to create ‘avatars’ to help Cloud out (like Sephiroth did with the three Remnants), but she decided not to, as she didn’t want to ruin Cloud’s memory of her. Or at least, that’s what the FF Wiki mentioned, which evidently took it’s info from the Ultimania.
Sorry for the late-ish response, my internet went down >.<