To understand Sephiroth's true power in AC, you have to understand what is the Lifestream. It is the source of all magic and life in the FFVII universe. Sephiroth could corrupt AND controll it. If he isn't a god, i don't know what he is.
And the Lifestream have a great power of destruction(like was showed to us, in "On a Way to a Smile"). The corrupted Lifestream is more powerfull than the pure one, meaning that he(Sephiroth) can use it to destroy an entire planet if he want.
Remove the "" of the word "god". He was litterally a god in AC, there is no discussion about it. The Reunion Files say that he is the most powerfull being in the FFVII universe(including beings like Omega Weapon).Honestly. He had goals...didn’t come close to achieving them or doing half of what Kuja and Kefka did. For being a “god” in AC, he did nothing and yes, he may have been holding back but he still was defeated. So was Kefka and Kuja but they needed the entire party to defeat them and Kuja actually “killed” the party before losing. It took Cloud and his flashy swords to beat “god” Sephiroth.
He was only deffeated because he decided to play with Cloud. For example, let's say that in the final battle of FFVI, Kefka decided to have a physical fight(without using any magic) against one of the heros, and in this fight he was deffeated. That means that he isn't a god? Of course not! That only means that he didn't use all his powers, and losed because of this. This is exactly what happened with Sephiroth in AC.