Kefka was the more evil villain, certainly. Sephiroth was the better villain. Kefka was evil, because, well, there are people like that. Sure, there was experimentation on Kefka, but it wasn't explored extensively. Sephiroth had much greater depth to his story, as well as a poignancy Kefka lacked. Sephiroth was enigmatic; he was seemingly both the manipulator and the manipulated. Kefka manipulated to a degree, but only to further his goals of causing others pain. Sephiroth had superior background, more complex motivation, and symbolic meaning superior to Kefka's. Do you know what Kaballah is? If you don't, then maybe you're not as qualified to answer this question as you might believe, since it adds yet another layer of meaning to Sephiroth.

As to a battle between them? I didn't think that was the original intent of the thread, but let's go with it. Human Seph would kill human Kefka. That much is obvious. A battle between their "angelic" forms, however, would be interesting. First off, Super Nova would have no effect on Kefka. Fallen One would have no effect on Sephiroth. Final bosses usually aren't overly susceptible to status effects and critical HP moves. So, Kefka hacks away with Ultima, Goner, and the like, while Seph resorts to Shadow Flare, Pale Horse (still causes damage), and such. Sephiroth wins if their respective HP amounts aren't balanced. If they are, Kefka probably wins. If you want a fight based on speculation and not statistics, you'll probably decide that the winner is the one you wanted to win.