everybody needs a villain just as much everybody needs a hero.
And sephiroth was the introduced villain in the game to which we spent over two weeks to finish (at least i took more than two weeks :P). It's quite normal that we end up admiring the bad guy as much as we admire the good guy, because that's who you spend your entire time along the story.
Besides, the "cool" villains are usually quiet, calm and mysterious, to which you barely know anything about (unlike the hero that you get to know along your travelling), and that just makes you want to know more!! Like "OMG i'm so turned on right now, i mean, why did he turned bad????" kind of response :P
And if I remember correctly, "emo" was getting quite popular around, which could be another reason to make this character lovable...so...yeah XD (yes i consider sephy of an emo guy....)
nice thread by the way. Sephiroth needs sum luv and attention too!