Sephy was necessary to tie up the loose ends created throughout the movie. You can't have remnants running around causing havoc without expecting Sephiroth to show up. Personally I think it would have been more dramatic if he showed up earlier than he did, beat the snot out of cloud, and cloud manages to escape. Maybe have some kind of training montage as was popular in many movies, more stuff happens, he becomes more resolved, and re-confronts Sephy to put him down once and for all

The whole time I was watching AC for the first time though, I was hoping that Sephy would show up to fight cloud, beat cloud, then Kefka would appear out of nowhere, for NO reason, beat up Sephy AND cloud at the same time, then leave and then "The End" rolls down the screen... Just to put the fanboys in their place. Kefka > Sephy, Discuss

*ducks*