Sephiroth could probably survive/easily dodge hadoken. And since he doesn't rely on materia, and since only he can use his sword (edit - he is also capable of summoning it, so even if thief somehow stole it, he gets it back), he wins. It also helps if everyone present is distracted by a nude Tifa.
Also, forgive me if I'm wrong, but doesn't this breach the rules somehow?
The teams not 3 vs 3, but I presume that's not a hard rule, and the Light Warriors did technically originate from a game..
If anything, Loz is the rule breaking character, because he's never been in a game, only Advent Children.. But he's also been in a lot of vs threads, so I decided to use him.
LOL @ Thief contract raping them. He probably would, too.
Ice 9 was Red Mages potential universe freezing spell. In a rare moment of competence, he used it combined with a bag of holding to single handedly beat Kary.
Black Mage can probably get them with collateral damage, if nothing else I guess.. Assuming he doesn't miss the ground. Seriously, his aim sucks..
Those tendrils of concentrated evil are a far more effective ability.. That, or maybe he can simply blitz and absorb their powers, like he did with the four fiends.