Okay, I just got done beating Sephiroth. It was probably a good deal luck (he started getting repetative with reaction), but here's what I did:
First, I had 6 item slots, all devoted to elixirs. Then I put elixir on my shortcut menu. I did the same with Curaga. For abilties, I made sure I had Retaliating Slash, Once More, and Beserk Charge. I also equipped most of my 'boost' and 'plus' (Combo Boost, Final Plus) abilties, as well as almost all of my 'Action' abilties. A good combo with a plus or two and Guard Break, Explosion, and the support ability Final Plus can do a whole bar of Seph's life after you react. Leaf Bracer is a must, but the rest is up to you. I had the Ultima Weapon, but MP Haste is good if you don't. I was also lvl 74.
I'd recommend having your Wisdom and Final form leveled a bit, the glide and dash abilities work wonders.
When the battle starts, you have to immediately react with triangle. After you do, lock on and then unleash a good combo on him. When he disappears, try to find him by locking on and keep dashing with square (the Wisdom ability). Try to stay away from him. If he does happen to hit you, you can use Retaliating Slash (square while knocked down) and if you time it right, start hitting him instead. He'll warp a bit, but when he starts to walk (and then it goes dark) get ready for Reaction with triangle. Heal yourself when needed with Curaga, but try to save your elixirs until later, just dodge and react then combo when you can. Take advantage of Beserk Charge - if you have no mana when you react, you can continuously hit him for some time before he warps away.
After a few life bars are gone, Seph will bring a few new moves to the table. He will create anywhere from three to 12 or so dark orbs that track to you or just appear around you. You can hit these back or away, and maybe parry Seph at the same time. I basically dashed around and hit some, since it's hard to dodge Seph, see anything with orbs in your face, or deflect the orbs without getting hit. It's a nuisance, and will take some practice. But actually fighting Seph is the same. Another move he has is creating some flame pillars around him. These do decent damage, and pull you in towards them. I found it easy to dodge if you were not in the middle when he cast it (>.<) using glide. Just glide towards the edge until they go away. Seph is immobilized while casting it.
The last move he adds is Sin Harvest. The oh-so-good move from KH. He will fly in the air, and say something about your sins or Sin Harvest. That's your cue to bring up the shortcut menu. Sin Harvest takes you down to 1HP and removes all you mana, so the moment you lose your health and mana, use an elixir. This is why you've been saving them. There is no good way to counteract Sin Harvest once you've run out, so it's ideal to have used little to none before he starts it. **However, watch out! The moment you use the elixir, before you even finish the animation for using it, press triangle. You'll get it down, it's L1+square then triangle right away. After Sin Harvest, you'll be full health and mana and beating on Seph if it's done right. (Be sure to let go of L1 so you can react instead of using a move
)
The last move Seph has is Meteor - he hurls a bunch of meteors. I found it easy to just glide from one end to another using...glide.
It's basically a luck and persistance fight. Seph will start to warp more and hover a bit faster near the end, so be on your toes. With the right abilities, skill, and luck, he'll go down.
Once More will save you. It'll insure that you live long enough to cure after he hits you around.
