I...still don't get it. He's calling him by a title that Sephiroth has had (for a while). As in, he says it sarcastically and has always done so? I imagine, back in the earliest days, that Cloud would never call a General by his title sarcastically without expecting severe punishment. And as Sephiroth was who he originally looked up to and wanted to join his troops, 'sarcasm' isn't how he would address him all of the time.