As for the orphans issues -
Marlene does not have Geostigma, because unlike popula belief, it is NOT a disease, it is the lifestream attacking Jenova cells that remain in people, the only people who get geostigma are those which have Jenova cells in their body. Ive already explained that Jenova cells are in face Sephiroth cells but its the same principle.
If you read the short story "On The Way To A Smile" youll read about denzels back story, how he was born to a high ranking shinra offical, and thus would have recieved Mako/Jenova treatment to enhance his abilities as all Shinra staff did. Marlene grew up in Coral, and then Midgar slums, so therefor had no make treatment, and thus no geo stigma.
Rufus tells cloud how hes living with the orphans - but he doesnt say specificaly which orphans but I think its obvious that hes refering to Shinra orphans, all the children who are forced to pay for their parents sins by working and dying for shinra. Tifa and Cloud took them in to help them.
Kadaj can control the children because of the same reason, they all have Jenova cells and thus can be manipulated BY SEPHIROTH AND NOT KADAJ, this is the key thing to know here - THE CHILDREN ARE NOT BEING CONTROLLED BY KADAJ - BUT EVERYONE INCLUDING KADAJ IS BEING CONTROLLED BY SEPHIROTH
when you know this, it becomes more clear as to the source of this control. The water is rich is Jenova cells, being so close to the lifestream and this helps, but a crucial factor is it is Aeriths grave, therefor his power also resides in this water, which explains how her spirit and sephiroths spirit seemingly fight it out for controll over the victems, The children are easy to take back, as you saw with Denzel, but With the strong ones like Kadaj, it takes Sephiroths defeat to get through to him, which is why he heard Aeriths voice at the end as he lay dying, shes a part of him just as she is a part of cloud.
It has nothing to do with Bahumat which is summoned by Materia, you do it yourself a billion times in game and do not need a mass of children to do it everytime, Bahumat is a simple summoning spell that is used to aid the search for the Jenova cells
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