Lol, I can't really say with any great confidence that any of the big SOLDIER characters are really bound by any sort of physiology, but I know what you mean. All in all, characters like Zack, Sephiroth, Cloud, seemingly ignore anything really concerning human physiology at any point in time when it suits the plot point, but I guess that's really just breaking the fourth wall. I just don't see a part in the fight where Sephiroth isn't really screwing around (until he starts losing, that is).
Yes, I agree that one of his goals is to kill Cloud, but I don't think it's really his end-all be-all point that he's trying to prove here. Again, at the end of the day, Sephiroth is going to be sure that Cloud's dead, but I believe that Sephiroth's ultimate goal is to make Cloud understand his superiority. The "I am above you" mentality that is so very much apart of his mindset, which I imagine he enjoys thinking when he's looking down atop Cloud from his place in the sky.
In the end, Sephiroth's out to prove a point. Death is death, yes, but I argue that he wants more than that at the end of the day instead of just killing Cloud. If he didn't, he would've ended it quicker instead of taking the time to systematically crush him. You could say he became more serious when he sprouts his wing, but really? He's still just screwing around until he's fully expressed his superiority. Yes, he puts the hurt down with mortal blows that will eventually result in the death of Cloud, which again, he wants, but its just not Sephiroth's main concern here.
I don't know if there's actually any real sort of disagreement going on here, but I think the way that Sephiroth goes about it says something about how little he's actually taking the fight seriously. Sephiroth has no real concern for the lives of others, so why should he take the fight seriously when he knows (or thinks he knows, rather) that he's going to win?