i was refering to the first Kalm, but i kinda had mixed down... :s
Personally i remember it having a kinda of gloomy atmosphere and i though that a gloomy calm little village would be a good change of pace for the typical not legal stage. just give it a interesting neutral layout and call it a day. ( i mean, look at the AC stages) Yeah, as a DLC stage may be difficult.. on teh other hand, nibelheim on fire... isn't that like the most iconic sephiroth scene outside of stabitty stabitty doo?
Yeah, on the other hand, a stage in the City of Ancients would look pretty cool, too. Nice looking blues; crystal staircases; giant seashell looking buildings. It'd look very bright; similar to Fountain of Dreams, but brighter in a way.
I do see your point about Kalm, but in all honesty, it's probably the least remembered village in 7. Everybody remembers Midgar, Golden Saucer, Junon with its giant cannon (and the scene against Weapon was awesome), even Rocket Town...but Kalm? There's a flashback there and that's it. The only other reason to go is for the Ruby & Emerald Weapon sidequests and its almost easier to just raise a Gold Chocobo or master every materia yourself than beat those two lol.
Assuming square would let them, and they were willing to put in the effort, the best thing to do for a stage would be to have it go across the planet to different locales. we already have midgar, so probably something like a moving stage that brings/sets you down in Junon (maybe on the cannon itself that can charge & fire occasionally as a stage hazard), brings you to Gold Saucer (for an almost Mario kart stage hazard as a bunch of Chocobo riders pass by on the race track every now and then), drops you in Rocket Town, then to the City of Ancients, Mideel for a possible Ultimate Weapon boss-like appearance, then finally Northern Crater before repeating the cycle. Or less, of course, because thats a lot lol. But, point is; something that can show off the more well known locations of the game other than Midgar.
Chances are, though, if Sephiroth were to be DLC and a stage came with him, it would just be a single location. Either inside the Nibelheim reactor he got 'Mother' or inside Northern Crater where he was confronted for the last time (Im not bothering with 'Spoiler Tags' since FF7 was released 21 years ago; its beyond the Spoiler date)
EDIT: I replied since this was in my Alerts tab; I didnt realize the thread had already moved almost 10 pgs since 11pm last night (at least it was 11pm for me lol).