I still don't get why he's tragic. I definitely don't see why Genesis would be tragic. We don't know much about Sephiroth's upbringing, but Genesis was raised by parents who loved him. If he went to the bad, that's down to him. Angeal didn't go to the bad. Sephiroth's parentage is only a tragedy because he chooses to see it as one. He could have used his powers for good. He didn't have to go on a rampage massacring totally innocent bystanders, a rampage which result in his own death.
But in another sense, Sephiroth does kind of fit the bill of the classic Tragic Hero, the guy who has it all and loses everything through some failure of judgement on his part, some fundamental weakness of character or understanding. Tragic Heroes are the agents of their own downfall, though.