The "tentacles " are just a bunch of pipes from his gun and he combines it with the junk from the junkyard. They also just disperse back into junk when he finishes one of his techniques. Doesn't look anything like Jenova Cells and nothing about them is mentioned. Just looks like an ability/limit that he has for some reason. He's angry as shit during that part of the fight and has resolved more than ever to kill Barret so that would make more sense. He's somehow able to shoot fireballs and electricity in this game and in the og game despite essentially being just some dude from a backwater mining town. Not like it's any more weird than Zack's limit break copying limit breaks, Sephiroth creating supernovas or Cid's inexplicable ability to jump 5 billion feet in the air for his limit breaks because they're apparently powered by his love of the sky according to an early ff7 guidebook that I stumbled across:mjlol.