Let's be honest, these two things have nothing to do with one another. They can just as easily have a story-related, interesting, and original plot for a Disney world that both involves the film villain (if there is one) and has a boss fight involving that villain. Anyone with creativity can come up with a solution for what on their face would seem to be "boring" boss fights like Frollo, but creativity is not SE's strong suit these days and I'm not giving them an excuse for their lack of it.
They do have if the villain in question is offed in the original movie and the world plot is set after it, except of course one includes more revival shenanigans like Ursula in KH 2.
But that's why I put an "if" before the whole paragraph.
I'm well aware that is certainly possible to craft an interesting original plot that involves everything you point out, but I am not confident enough in SE's writing capabilities to pull it actually off in a satisfying manner.
Being ok with having a trade-off in this regard isn't "excusing" Square for anything but just being personally content to live with this reality.
And yeah, I dunno, I'm not saying Sephiroth isn't final boss material lol, but I dunno why they just have to have it end with him acting like Sora barely made him break a sweat. Like idk, it just feels like fan service to people who love FF7 cuz they can't imagine anyone being stronger than Sephiroth or something. But yea it is sort of similar to what they did with some other superbosses in hindsight lol. I guess I just don't like Sephiroth's attitude all that much tbh, so it rubbed me the wrong way.
It may have to do not only with Nomura himself or FF VII fans as the other members of the team that worked on FF VII and the entire compilation around it also pointed out in supplementary material that not only is Sephiroth truly insanely strong in physical strength, magic
and will, in terms of the FF VII-universe itself there's also no one that's stronger than him.
The main reason Sephiroth "loses", especially to Cloud, is his own arrogance and tendency to wanting to "play" with his prey, considering it beneath him to use his full power against what he deems inferior foes.
Since his will is so strong though, Sephiroth's spirit can even endure past death and thus a single defeat doesn't really faze him.
As far as I know, it has been explicitly stated that Sephiroth so far never ever in any capacity he appeared, be it the original FF VII-universe, KH or Dissidia, showed the actual full extent of his powers. He's always just goofing/aloofing around.
As for specifically KH, I wonder what you expected instead then? Especially in KH 2 Sora is already portrayed as ridiculously overpowered in cutscenes as well as with some gameplay features, so Sephiroth being actually in serious pain or on his knees would only put more fuel towards painting Sora as a sort of all-powerful Gary Stu, is that not just protagonist-biased fanservice as well just directed at a different type of character?
If anything Sephiroth shrugging him off and not even being exhausted at all serves as a good counterpoint to that over-the-top shounen portrayal of Sora.
Not to mention he
does compliment Sora on being very skilled, and someone as aloof and detached as Sephiroth delivering praise also doesn't happen very often.