Oh God, I just can't help myself.

Just because the sword is called the Masamune, means in no way that it is the same sword. The CT Masamune was a blade of good and righteousness. Forged with the intent of upholding honor. Sephiroth's Masamune is the blade of a fallen hero. It is a sword tempered in betrayal. It is evil, simply by association with Sephiroth. An evil sword would have even less effect than a normal sword, or a heroic sword. Sephiroth's only hope is transforming into his "Bizzarro" or "Savior" forms and then avoiding all magic use. That's not a particularly hopeful situation one way or another.