I think having Sephiroth read some additional snippets from whatever journal he's researching when down in the basement could be good.
As for Sephiroth's childhood--the context clues as to what that was like are really all over the place if you look closely. Overall, those clues tend to point to a very dark and stressful childhood.
He never met his mother. In fact, efforts were made to ensure he would not. He was considered company property, and the Science dept's, no less. He was dehumanized at birth.
His father (Hojo) was not interested in claiming him as his own in any nurturing, paternal sense. To him, Sephiroth was nothing but a trophy to show off.
Sephiroth's preoccupation with finding out who his parents were can be said to reveal a rather large emotional hole. Becoming at least somewhat secure in one's own identity as a human being or at least a person of some intrinsic worth is something that generally occurs during childhood. Aside from his brief time with Gast, Sephiroth was most certainly denied this. His self-isolation after seeing the Makonoids housed in Nibelheim's reactor, how tremendously he snapped after reading all he could get his hands on in the basement, and how obsessed he became with his 'mother' after that shows a sort of preexisting codependency on the very concept of said parent. It shows how greatly he longs for that parent's approval. It also points to a man who was forced to grow up and play the part of an adult and a soldier so fast, there is likely a suppressed part of his thinking that is still very much that of a child.
Even Loz, Yazoo, and Kadaj all have a sort of childishness about them--tantrums, crying, and a sort mischievous play in their battles.
On the one hand, I agree with Starling. There should remain some mystery to Sephiroth's past. On the other--Would having more of Sephiroth's past unveiled really reveal anything we don't, on some level, already kind of know? It seems to me that knowing more would, at best, make it easier for some to empathize with Sephiroth. At worst, it would strengthen the misguided perception that a few fans hold that he's not a "real" villain because understandably cruel circumstances led him down the path he ultimately walked. (Which is BS in my mind, because poor childhood circumstances do not serve as an excuse for genocidal acts, but I digress.
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