I shall start from the beginning-
During the time of the ancients the Cetra spent most of their time searching for the promised land. Soon ones who disliked the journey appeared and they built shelters and elected to lead an easier life. Soon after The 'Calamity from the Skies' appeared and was defeated by sacrificing the Cetra, only the new people survived because they hid.
2,000 years later Dr. Gast found the 'Calamity from the Skies' in a 2,000 year old geological stratum, in carbon freezing. Gast named this organism JENOVA. Though Jenova confirmed to be an ancient (Here comes my first theory) I beleive she wasn't. I think she melded with the memories of the planet (Cetra's memories).
When Gast was killed by Hojo, (and the Vincent and Lucrecia thing where Vincent was shot and Hojo took Lucrecia and *mated* with her and *made* Sephiroth. While he was in the womb he injected Sephiroth with Jenova's cells which is the exact same process as making SOLDIER members only he was injected at birth, making him awesome.
Now I have a change of heart here, and I think Sephiroth was controlled by Jenova, as what happened to the other people. Jenova's mission, I think, is to destroy everyone who survived her the first round.
The thing that made me think that Sephiroth wasn't being controlled was the fact that he hadn't been controlled earlier. So I stick to the fact that He was only being Controlled when he took off to see Jenova and came in contact with her.