A few years ago, I might have bothered to read this thread. But now I don't care nearly enough.
I think Jenova really did set things in motion. I don't think she used mind control on Sephiroth - I think she merely manipulated him to doing her bidding. This helps explains things that Sephiroth said: he went from misinterpreting Hojo's notes so he thought he was simply created from Jenova cells to calling Jenova "mother" and believing she was a true Cetra that all the betrayers were working to destroy. Jenova has a history of being manipulative to get her way, such as with the original story of her killing off most of the Cetra. Otherwise, how Sephiroth came to this conclusion can only be explained by "eh, he made it all up himself." I think it's probably reasonable that Jenova worked to help Sephiroth go insane, but of course I don't know for sure. What I do strongly believe is that Jenova told Sephiroth lies and nudged him along. I don't think Sephiroth was being directly controlled - I think he acted on his own at times - but I do believe that he was following Jenova's orders in the grand scheme of things.
An argument I used to hear a lot is "well, if Jenova was in control, why did Sephiroth still fight you after Jenova was killed?" Because Sephiroth was insane and Jenova wasn't controlling him in such a strict sense but was simply manipulating him, possibly influencing him a bit with more direct control, but it's impossible to know exactly how much.
