One thing about Seph's and Gen's relationship that Genesis always forgot: when provoked too far, Sephiroth would come up with something spectacular. And when Sephiroth decided it was time to goad Genesis right back, he didn't hold back.
This sort of makes me think there is a pattern to be spotted. Yes, if you prod Sephiroth hard enough, for long enough, he will react. However, his walking away is not the reaction. That's just a strategic withdrawal. The reaction comes later, and will always be worse than you thought. This explains the situation in the game perfectly. First up, he gets the news about who and what he was created to be in the reactor. So he stalks off to the basement and researches, and does all the strategising. Then comes the reaction - burning down the town. Of course, then Zack and Cloud do a couple more things to piss him off, and he winds up stalking off into the Lifestream for five years (while they spend the same amount of time immersed in mako tanks) before coming back with a bigger and better response (destroy the whole damn planet).
Oh damn. I've just realised. From Sephiroth's perspective, the whole first game was just the latest gambit in an ever-escalating prank war. Excuse me, I have to go and thump Zack and Reno around the head. Repeatedly.