We present an investigation of the microstructure changes in V₂O₃ as it goes through its inherent structural phase transition. Using V₂O₃ films with a well-defined crystal structure deposited by reactive magnetron sputtering on r-plane Al₂O₃ substrates, we study the phase coexistence region and its impact on the surface roughness of the films and the magnetic properties of overlying Ni magnetic layers in V₂O₃/Ni hybrid magnetic heterostructures. The simultaneous presence of two phases in V₂O₃ during its structural phase transition was identified with high resolution x-ray diffraction and led to an increase in surface roughness observed using x-ray reflectivity. The roughness reaches its maximum at the midpoint of the transition. In V₂O₃/Ni hybrid heterostructures, we find a concomitant increase in the coercivity of the magnetic layer correlated with the increased roughness of the V₂O₃ surface. The chemical homogeneity of the V₂O₃ is confirmed through transmission electron microscopy analysis. High-angle annular dark field imaging and electron energy loss spectroscopy reveal an atomically flat interface between Al₂O₃ and V₂O₃, as well as a sharp interface between V₂O₃ and Ni.