The Sephiroth you can Gameshark in is indeed the one you get in the flashback. You can also technically bring in Young Cloud, who actually has the highest stats in the game if I remember correctly. The main problem with Sephiroth is that you can't equip him, nor can you change his materia. When you consider later on you can get the Bahamut materia and KotR, his hit all elemental attacks start to seem a little bit gimp.