Thanks for replying and offering some interesting feedback on my theories/questions. I'm going to offer my opinion on the replies in order of their posting so I don't get confused over who offered what theory.
Son of Sephiroth - I would like to know why you still think the wolf in the movie is still Zack/Zack's spirit, because to me it just doesn't seem to match up.
Hazuki Sensi - I find it difficult to address your opinion entirely because my knowledge of what happened in the FF7 game is rather murky. I haven't played it for years, so many important things I probably do not remember. I remember that in FF7, yes, Jenova is defeated. But you defeat her 3 to 4 times throughout the game, so I don't believe that her actual entity is gone. After all, in the beginning of FF7 AC, we see the Turks descend into the Northern Crater to retrieve what they believe is Jenova's head. The Turks and Rufus talk about the box as containing a head many times throughout the movie. I would assume that they know (or at least Rufus) what they are talking about considering it is the Shinra organization that experimented on both Jenova and Sephiroth in the game. I might add that Rufus expresses along with Reno that Shinra's ultimate goal (for the moment) is the rebuild the planet. Rufus believes that Shinra must repay "this debt of ours", which makes sense considering how badly the planet is trashed from Shinra's decisions. I believe that Rufus is telling the truth here because of his rather selfless actions later in the movie where he tries to deny Kadaj his reunion by throwing the head over the side of the building and then shooting it. All in all this seems to prove to me that, although your theory about the cells being Sephiroth's makes sense to me, what lies in the box is indeed Jenova's head.
Hazuki Sensi - On the orphans, thanks for your explanation. I had not known that Shinra had experimented on the orphans. I also have not read "On the Way to a Smile", so I did not know about Denzel's past. I find it interesting that Kadaj initiates the control of the orphans where Aeris' power would be the strongest. You would think this might weaken her ability to affect the world and help Cloud later in the movie, but that is pure speculation and isn't true.
Kingdom Twilight - And I thought I had problems...
Archtyrant - The idea of Kadaj and his gang being clones of Sephiroth hadn't occured to me. This is another instance where my hazy memory of the FF7 game comes back to bite me. I would play it again but the damn sound won't work in game! Anyways, I don't entirely understand how the Sephiroths you fight at the end of the FF7 game are mutated forms of his actual body. How did these mutations occur? If he could mutate his body to make it more powerful, then why didn't he do so against Cloud in FF7 AC? I find it more feasible that Sephiroth is in fact physically dead and that the Sephiroths faced at the end of the game are powerful manifestations of his mental power. After all, as seen in the Nibelhiem incident in game and in the anime re-creation of it (The Last Order), Sephiroth is stabbed through the back with the buster sword and hurls himself into a pit of mako. You don't just walk away from that! I believe he knew that even with his body gone he could still heavily influence the course of events, perhaps with even greater power and mobility, and fulfill his objectives. In The Last Order, Sephiroth is initially enraged when he is backstabbed by a nobody (Cloud), but then becomes his normal cool, collected self again when he realizes that he is still the one in control. As for Kadaj and his gang being clones of Sephiroth, it makes a certain amount of sense except for what he says in the movie. You definitely have a different version of English subtitles than what I have, but in my movie (I think Hazuki has my version as well) when Kadaj is speaking to Rufus about his goals, Kadaj says that "It's sad but there's no helping it. We're spirits after all." Later on when he is about to face Cloud, Cloud says in reference to Kadaj's sadness of Sephiroth being chosen of Jenova over Kadaj,"The spirits don't know anything, huh?" So I don't think that Kadaj and his gang can be merely clones of Sephiroth when evidence in the movie points away from that. But in your movie version, right before they battle Kadaj says,"I was only a clone after all... just like the old you!" My version says,"I'm just a marionnette after all... just like the old you!" This not only makes sense with other statements in the movie, but Cloud was in fact Sephiroth's bitch for quite some time in the FF7 game, being forced to do things he did not want to do and having the translucent Cloud (the real him) only able to watch on helplessly. But that was the old Cloud. As for you're version, it just doesn't make sense because the old Cloud was a clone of Sephiroth, and Cloud still is a clone of Sephiroth, that doesn't change. But other than that, thanks for your explanation of the Jenova cells corrupting the Lifestream, I had not caught that. I had thought that the weaving black clouds that appear when Sephiroth and Cloud fight were just there for dramatic effect
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I'll try to address more replies later but it took me an hour just to read through the ones already made and type a reply! Thanks for all the feedback again, guys!