Oh, so if you still didnt unlock the Omnislash, you unleash it anyway? Didnt know that!
That's correct. In actuality, that last Sephiroth only has, like, 30 HP or something silly like that. Even if you do something extremely dumb and bring a level 7 Cloud to that fight with the Buster sword and only do 11 damage (or whatever) the script is actually written to kill Sephi after he makes Cloud counter attack.