Ahh, back to our discussion
Well we aren't given any indication of his god complex before hand because it didn't surface until Sephiroth's mind fractured and he began to hate humanity. When Sephiroth discovered his whole life was a life and that he was an experiment, something shattered within his psyche and he in turn lost his sanity and began to delve deeper into his own hatred and madness. Thereby, he fell from grace and became the villain he is now. Although Sephiroth wasn't being controlled by Jenova, her cells and his madness all exerted an influence that in turn made him turn his back towards his comrades.
It's kind of like how Shin eventually became the asshole villain thanks to Jagi whispering poison in his ear, and making him take Kenshiro's girl for himself.
I don't know why you think that's such an infringement. A lot of fans have built up Sephiroth as this invincible, untouchable, and perfect character, when they conveniently forget he suffered from a mental breakdown and was literally terrified when Cloud opposed him. The whole point of his portrayal in CC was to show Sephiroth as human and vulnerable. Even though he's super human and incredibly strong, he still had a human heart and wasn't always the cold, empty and heartless figure we saw in FFVII. They *wanted* to show Sephiroth as a vulnerable person here.
And Sephiroth's not dreaming of Cloud in the lifestream, he's thinking about him. It's part of his way of ensuring his rebirth. He had to grasp at something that would allow him to keep his soul, and the only thought and emotion he could think of that was strong enough was his hatred of Cloud. It's no different than Jagi living for revenge on Kenshiro.
And hey, yaoi fangirls are an important demographic here