The Birth by Sleep Ultimania actually deals with the question of Sephiroth's origin in particular. Zack makes an ambiguous comment about wanting to be like another hero, and Nomura has confirmed that this other hero is Sephiroth. Further, in regards to the black feather which falls next to Zack during the credits of Birth by Sleep, Nomura says that in Kingdom Hearts and Kingdom Hearts II, Sephiroth appears as a being of darkness, but during Birth by Sleep, it is unclear whether or not Sephiroth is already a being of darkness.

This would imply that, at some point, Sephiroth was just a person who later, by embracing darkness, becomes an a being of darkness who, as Sephiroth tells Cloud in Kingdom Hearts II, is bound somehow to Cloud's own darkness.

Nomura has also stated that the ambiguities regarding Tifa are intentional. We're supposed to wonder if she's an embodiment of his light or just someone who is trying to help him find his light. Also according to Nomura, Tifa was meant to originally be in Kingdom Hearts and was cut from the title due to time constraints.

Generally, I'm hesitant to retcon characters into canon before they make their official debut. Especially because each Kingdom Hearts game tends to get its own official retcon, if it was decided that Tifa was to play any significant role in Kingdom Hearts, it would have been included in Kingdom Hearts: Final Mix. After all, Final Mix did include a battle between Sephiroth and Cloud. However, this entire battle appears to be separate from the canon presented in Kingdom Hearts II as Sephiroth and Sora have never encountered one another before when they first meet in Hollow Bastion.

For continuity's sake, it's probably best to assume that Sephiroth's role in Kingdom Hearts is a non-canon cameo appearance. He's an optional boss that was added for the North American release and was not intended to be a major part of the plot. The subplot between Cloud and Sephiroth is developed in much greater depth in Kingdom Hearts II, so I think it's safe to say that's where canon for that particular narrative strand begins.

As for Kingdom Hearts III, I think it's far more likely, especially considering the way the battle between Cloud and Sephiroth ends, that we will explore the nature of the relationship between Cloud and Sephiroth. I also would not be surprised to see an appearance by adult Zack.

At the same time, the credits at the end of Kingdom Hearts referenced Rinoa heavily and she never made an appearance in Kingdom Hearts II, so it's equally likely that they'll leave it all up in the air.