In concern to Sephiroth and Cloud, taking into consideration also the information given in Advent Children, I would say that the only way for Sephiroth to be destroyed is if Cloud stops living in the past. That means he has to let go off the guilt he feels about Aeris' and Zack's deaths and move on (meaning take care of Tifa, who, as she herself mentions in KH2, has (contrary to Aeris) light).
Although, mind you, I don't think Sephiroth will ever be destroyed in the FF world because the fans would make quite a riot if Cloud beats him.
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