I always thought Sephiroth was a pretty badass villain. Today, he gets something of a bad rap, mostly due to overexposure, but that really isn't fair. Back when FFVII was new, back before the series was milked to death and still taken somewhat seriously, Sephiroth was the man.
It's all in the way the game sets him up, really. You spend the first quarter of the game fighting against this evil corporation, only to get caught and locked up. When you wake up the next morning, your cell's unlocked, the building's splattered with blood and signs of a struggle, and the president of that corporation is dead at his desk with a huge katana in his back. That alone should hint that the guy you're up against is pretty tough, but he continues to dog your steps throughout the game.
That huge swamp snake that could kill your whole party in one turn? He killed it by himself and impaled it on a tree. That world-ending materia that you want to keep out of his hands? He lets you find it, then takes control of your mind and forces you to give it to him. That innocent flower girl who may hold the key the the planet's salvation? Gutted like a trout.
And, of course, his theme song just sends chills up your spine.