Lavos's sentience is definitely a side topic to this discussion, so don't discount it.
People seem to equate "sentience" with "perfect," or perhaps, "all-knowing."
Dictionary.com definition: sentience: The quality or state of being conscious (which means you're physically/mentally/intellectually aware or have the potential of being aware).
The turn of events that includes the Frozen Flame splintering off of Lavos, followed by mankind's contact with the Frozen Flame thus making them intelligent, isn't proof of either sentience or insentience on Lavos's part.
Humans are sentient beings, yes? And we, as humans, make mistakes and are victims of irony, yes? E.g., we sometimes expect one thing to happen, and another thing happens in its stead.
I don't see Lavos's ejection of the Frozen Flame from its body, even if it wasn't intentional, as a grounds for justifying sentience or not. The Frozen Flame could just as easily have been ejected from Lavos's body even if Lavos was sentient. For all we know, Lavos could have been like, "Oh shit, I just lost a part of my body..." just as easily as it could have not been aware of the ejection of the Frozen Flame from its body.
Or perhaps, Lavos did intentionally eject it with the purpose of hoping that someone would retrieve it, and thus become his servant through the link that the Frozen Flame provides. My point is, the Frozen Flame could have been ejected from Lavos's body if Lavos was sentient or insentient, whether it was intended or not. Intention and sentience are two separate things.
Either way, one way or another, humans got their hands on the Frozen Flame, became intelligent, and eventually saw Lavos as being a power source they could feed off of.
For one thing, insentient beings can't produce sentient offspring. Clearly, for humans to gain intelligence from something like the Frozen Flame would mean that the Frozen Flame is itself sentient, and if the Frozen Flame is sentient, the source from which it came, Lavos, would have to be sentient, too.
As for humans feeding off of Lavos's power, parasiting the parasite if you will, offspring are capable of rebelling against, disrespecting, and defiling their parents, yes? And this is something that parents don't intend to happen, but nevertheless prepare for it.
Lavos never intended for humanity to feed off of it, as it certainly responds angrily to the Mammon Machine, and smites it appropriately; whether it also intended to destroy Zeal or not is debateable, but we can surmise that it certainly wanted to stop being fed off of. Aww, Mommy Lavos doesn't like to breast feed...
Indeed, Lavos's awakenings are comparable (not in scale, but in the same sense) to a child poking their sleeping parent and thus incurring their wrath.
Lavos was still a "parent-in-training," and is only taking things as they go. Lavos really didn't take good precautions in disciplining his new servants, but like I've said already, it's not proof of insentience, as sentient parents can be just as incapable of disciplining offspring as insentient parents (not that insentient lifeforms really need to be disciplined, anyway...)
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If Lavos indeed intended it, Lavos intended for the intelligence it passed down to be used to its own benefit. However, it didn't quite turn out that way, as humans tried to feed off of Lavos, and then, eventually destroy Lavos.
Indeed, my conclusion is that Lavos was an imperfect being, especially in the case of sentience, since things didn't turn out they way that it might've actually intended.
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And, only as a sidenote, I see Lavos as being sentient. Jellyfish are insentient. Jellyfish don't have brains. Jellyfish aren't physically/mentally/intellectually aware. Jellyfish just float about, and eat only by catching things that unwittingly swim into their dregs. (In other words, the Jellyfish you encountered in the Jellyfish Sea/El Nido Triangle wasn't an actual Jellyfish, because it was indeed sentient, and aware of your attacks, and countered your attacks thusly).
Lavos is clearly no jellyfish in the aspect that Lavos is an active lifeform because it is aware, because it is sentient.