FF VII without Sephiroth is like Jaws without the shark. The one thing that bothered me was the fact that he basically came into the game to have a fight and lose. This is an awful waste of a great character. I think if he'd come into the movie earlier and done some terrible things to Midgar and it's people it would've been a much better movie. And it would've made the stakes higher when Cloud and Sephiroth finally face off.
But he did. Geostigma and the three "brothers" existed only because of him. He was fuc*ing the entire world(killing people and corrupting the Lifestream) during 2 years. This is very clear in his dialogue with Cloud in the begin of the fight.
And Midgar is a destroyed and desert city after the events of FFVII. He couldn't do some terrible things to the people of Midgar, because no one lives in Midgar anymore.
You're not wrong but my point is it just feels like Sephiroth was tagged on at the end. He should've been a HUGE part of the movie (he's on the freakin cover). A shame.