I ain't buying that either. His sword was sure real and metal
While I struggle to believe that the sword was actually a part of Jenova, I feel like it's the only explanation that makes sense, and here's why:
When Sephiroth is initially thrown into the lifestream, he is still holding the masamune. It is described at least once in the game as a sword that ONLY Sephiroth could wield. Later, when Jenova breaks out of Shinra, the masamune makes its appearance being impaled in President Shinra. Note that at this point, Jenova has left the building. The odds of this being the same masamune that Sephy had when thrown are not good. The original is most likely still in the Northern Crater at this point.
Now why would anyone make a second masamune, if the only man who could wield it, already had one? It's possible that Shinra had a second one lying around, but highly unlikely.
Now my memory is fuzzy as I haven't played through in a while, but I know that the masamune makes another appearance during the unfortunate events at the Forgotten Capital. Seeing as the first sword was in the crater, and the second left at shinra, I think it's safe to say that this is a separate instance of the masamune.
Now you're probably thinking "Oh this guy forgot about the Gold Saucer, they just hand them out willy nilly there." I'll grant you that it is POSSIBLE. I won't deny that. But I think it's far more logical to assume that this theme park of sorts is not handing out deadly weapons, but rather cheap replicas (I'd be surprised if it'd be real metal). Sure, if you have Seph in your party, you can equip it, but that was never supposed to be possible, so why would Square bother making a second item when they could just reuse one they already have.
In conclusion, while I don't think the idea that the swords he's using are indeed metal can be completely discounted, I find it highly unlikely that he is just finding perfect copies of the masamune along the way. Certainly not to the extent that he can just leave one behind purely for the nuts of it. Therefore I think it most likely that the swords are indeed a part of Jenova itself. This is but one man's humble opinion.
Edit: After posting this, I remembered that the line I was thinking of about Sephiroth being the only one who could wield the masamune was from the original translation, and that perhaps the more faithful translation you've completed may make the meaning of the line different. I haven't gotten that far, but if this is the case, then I will concede that multiple legitimate copies of the masamune could exist, depending on how the translation worked out.