Sephiroth always looks and acts like an evil, so the first thought that comes into the mind is that he is evil. His past story might make us change our mind, but even at his young age, he was wicked because he killed many innocent.
His character shows that he is more practical and realistic, but if that is what makes him do evil deeds, then he is evil. However, it is upto the fans because these days even the evil played character is of heroic importance.
Sephiroth is the real evil hero or the villain and game without the villain is a failure.