He's a street brawler (with a little kung fu thrown in)
Nationality and hair color aside, I don't even get the visual comparisons with Ken. They're dressed nothing alike lol.
I think it mostly boils down to aesthetics. Their punches might be different, but they are still punching. Their clothes may be different (tho both red themed) but they are still just regular real world clothes. They may have very different personalities, but surface value they are both muscular blonde men with blue eyes and overly large hands and feet. Hell their special moves are both fire based.
I think the main problem with Terry is that tho different from Ken, he isn't different enough when you consider all the SNK characters we could get who don't have any passing similarities to any of the characters in the current roster.
Look at Mai. A brunette woman (which we don't have in smash) a female third party (only one of those) a fan fighter (none of those)
Or Nakoruru. Yes, we already have a few women with swords, and we already have two characters who have a bird partner. But her being both of those at least means that no one character can do the things she can.
Or dare I dream, Cham Cham who would be a hyperactive cat girl with claw slashes, pounces, a body sized boomerang and a chimp sidekick (plus smash is currently stacked with too many dog compared to cats 5/2)
The point being, he may not be exactly like Ken, but there are so many other characters that wouldn't be anything like any of the current roster, which is why people would find Terry underwhelming. It's the same reason I was bummed at Ken's announcement because there were so many other SF characters that would have added so much more variety, that was lessened by him being an echo, but if Terry is added that's as a $6 premium, which is much harder to be happy with.
And I mean, if you cut Terry's ponytail and trimmed Ken's eyebrows... Dudes could pull a Prince and the Pauper on us and none of us would know. Capcom and SNK even acknowledged how similar they are by giving them a rivalry in the games where they crossed over with eachother.