Dawnbreaker
~The Other Side of Fear~
I really hope that, in the next Compilation title, Sephiroth will only appear in flashbacks (for instance, when passing by the Forgotten Capital, a flashback of Sephiroth killing Aerith...) and being referred in dialogue in the main plot and with several NPCs around the world, in a way to show how Sephiroth marked the lives of everyone, both for good and bad reasons and that his shadow still lingers in the planet, even though he's dead.
This. I feel that resurrecting Sephiroth over and over is just diminishing his character and milking the cashcow. I mean, I would be annoyed if he were entirely erased from the FF7 universe. He obviously had a huge impact. But constantly having him fight Cloud and losing (for the obvious good vs evil thing) would be ruining and get boring after a while.
The only other way I could stand a "return" is any more pre-Nibelhiem stuff. That leaves much to be worked with without running the risk of it The Enternal Battle of Cloud vs Sephiroth x123654987