Man, how does this thread have no posts in it? I'd have thought this was a big money matchup.
OK, on one side we have Bowser. It's easy to brush him off as that guy that Mario beats up on all the time, but you have to remember that Bowser is actually a pretty scary lizard. He can breathe fire, has great defense with his spiked shell, and can actually jump pretty high for such a heavy hitter. He's also not unintelligent, despite being a colossal reptile. He can speak, he can plan, he commands an army, and he's always capturing the princess, which suggests he's smarter than her and her guards at least. On top of that, he has his desperation attack and can transform into Giga Bowser, which increases his size and deadly force a hundredfold.
Sephiroth on the other hand has insanely powerful magic abilities, a huge sword, and is totally maniacal. The product of an experiment gone wrong, he burned the village down, it's long gone. The man is willing to do anything, everything. He's completely nuts. In fact, it's kind of funny how Bowser is the more human of the two characters here.
I'm having trouble deciding right now. I'm leaning towards Bowser, but I'd love to hear arguments from both sides. Hit me with your best shot!