Well, isn't one of the revelations in Final Fantasy VII that the Sephiroth seen throughout the game is actually Jenova? That would mean that you only actually see Sephiroth in flashbacks and at the Northern Crater. Do people respect Sephiroth as a villain while counting all of the appearances of Jenova or do they just mean the person in the flashbacks and his appearance in the final dungeon?

As Elly mentioned, you see more character development for Sephiroth in other games, but Sephiroth has always had a large following for some reason.