You're assuming it was driven by instinct. As you said, we know little of Lavos, and have no idea what truly motivates it. Just because it doesn't have some tragic backstory that we know about, it's a poor villain? Lavos is manipulating the entire world to suit its own purposes, but we have no way of knowing what those purposes are. Given that as you cut through its shell and reveal its inner cores, its appearance is more and more humanoid, I think believing that it was a simple parasite motivated by instinct is not the best conclusion to come to.
Also, even if he is a simple parasitic beast, so what? Jenova was also a massive parasite with untold power and no motivation. For that matter, so was Sin (it had some rationale for why it existed, but none for why Yu-Yevon's "armor" became an instrument of eternal death). Yet no one complains that those are poor villains.




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