I was afraid of Lavos the second I saw what he could do, me and every other remotely sane person who played the game. Sephiroth's initial impact isn't even close to comparable. He made it past Shinra's armies unchallenged and massacred a village. That says badass. It doesn't say overwhelmingly powerful. Lavos destroyed modern civilization singlehandedly in his base form. That says world-annihilating incomprehensibly ancient Lovecraftian hellspawn that absolutely nobody can do anything about. Helplessness is a key element in the exercise of terror; which one is it more sensible to be afraid of? I'd be willing to say that the only reason Crono didn't lay down arms immediately at the sight of such an implacable foe is that he's quite stupid in the intellectual sense of the word. If he had possessed even a modicum of intellect, he would have turned into Shinji the moment he was told that he and his party alone possessed the power to face down Lavos.
That nobody can do anything about? Funny, seems that once Crono, Marle, and Lucca got past the inital shock of the Lavos video, they were fired up to take him down. Hell, they even did. And Crono and Marle may not be very inteligent, but Lucca sure as hell is. But "fear" was never a huge theme of any part in Chrono Trigger.
So yes, there damn well IS fear associated with Lavos, and a hell of a lot more than anything Sephiroth manages when you first see him. Sephiroth's been variously described as a tragic case of someone losing their reason to live, a complete psychopath, and even a delusional righteous avenger who's exacting punishment for the perceived wrongs of humanity, and he does eventually gain civilization-ending power, but at no point in the entirety of the FFVII canon does he have the sheer terroric impact of Lavos, including when he's Safer Sephiroth, whose star-destroying abilities are battle mechanics and therefore not canon. I don't know what bizarro style-over-substance-land you're living in, but in my world we judge foes based on their demonstrated capabilities.
I judge fear based on setting, mood, actions, visuals, etc. Setting, I would say they are on par. You got a bloody hallway with Sephiroth, and a massacred village, and you have a wasteland with Lavos. Mood I would say favor's Sephiroth more, because turning on the video with Lavos on really didn't have any tension building. Though, it was a bit more shock value seeing the giant porkupine come out. Actions, they both killed stuff. Visuals, I would give to Sephiroth. The Lavos video was impersonal. You see him shell the world. You didn't see people die, you didn't see buildings get knocked over. Sephiroth's was much more personal, as you didn't see vague destruction from a bird's eye view. You saw the dead people, you saw the burning houses. Much more dramatic buildup.
In that last respect, Kefka beats them both. When he distrupted the Statues, and caused the WoB to be destroyed, you saw both bird's eye view of destruction, and you saw induvisual people meet their ends.
