Hi, Guys I wanna offer a counter opinion if that's okay.
First off I must say I like the Lone Wolf as much as the next guy, and while I can feel where some of you guys are coming from with the whole Ryu/Terry thing. The thing is that I actually like Kyo more then Terry now.. WAIT don't flame me let me explain!
I played KOF94 in the arcades and I thought WHOA Terry/Andy/Joe Team Awesome! This is from playing Fatal Fury 1/2 and watching the anime. I didn't think much of Kyo when I got to play 95 either, I was like oh.. Ryu Clone Lame.. but Iori! Iori was badass especially his freaking maniac laugh "hmm hmm hmm, hehehe, muahahaha!" He was like a badass goth with a cool super too! anyways back to Kyo.. after 95 I was hooked on KOF i mean.. I had Iori and FF team.
It was 96 when I started to like Kyo because they totally changed the character. They changed him from a shoto clone to what I kinda call "Anti-Shoto". He lost his fireball to get something so much better, he would step forward parrying whatever was there then proceed to punch the guy in face! and his hands were still on fire. I mean to most this might not be all that cool.. but to me a SF2 fan I thought this character was unique. Sure terry had his fireball (power wave), a couple versions of a flying foward attack (crack shot/bare knuckle), and an uppercut (raising tackle). I mean this made Kyo a REALLY aggressive character.. I mean fuck this fireball uppercut stuff.. I'd rather run in with my fists flying. And his super got alot cooler too.. his Serpent wave would cause his whole body to flame up like the human torch then he would swing all of it at you with a motion of his hand.
His attitude was different too. I was used to Ryu and Terry with their tough training and honorable ways.. but I was also getting into anime at the time too.. and Kyo seems to be like an anime character. Like he's so arrogant because he must be very powerful, normally he doesn't even have to try.. just imagine what happens when you tick him off? He's got the whole Goku thing going on there (but with Vegita's attitude). There seems to be some ultimate secret power that he possesses. People often hate this kind of character.. but that is how life is.. some are more talented then others. Like how some girls have larger boobs then others, you can hate all you want but it won't change the truth. They also couldn't have possibly altered Terry to match Kyo because this was Kyo's game.. Terry was the hero of Fatal Fury.. the people who made KOF probably didn't have the right to change Terry in that way. And if your the hero/star of a certain game you are usually the best.. like Terry in FF, Ryo in Aof, Kyo in KOF, Ryu in SF.. etc.
While Kyo never really was the best character in any KOF game (gamplaywise I think 94/95 was supposed to be his strongest) he always was middle tier like Ryu, and his most devestating comboes comes from juggling the opponent.
Then in 99 he got his new costume, which imo still looks better then Terry's MotW one but at this point I'm biased towards Kyo. He also gets new moves which looks very stylish (I like cool looking things).. and in 2000 he gets this totally awesome looking super where it looks like Ryo's Ichigeki Hissatsu (1 Punch super) but Kyo's looks soo much better it looks like he is putting his whole body's force into the single blow.
Also you eventually get tired of characters, like Ryu he was cool he beat everyone and walked the path of a warrior.. however eventually nothing happens and it seems like he's just some wondering bum. Terry's story was interesting too, a story of growing up on the streets avenging his (step) father's death with some crazy never seem to die criminal lord, then eventually raising that guy's son. And Kyo's.. who's story of a young man and his destiny of defeating a God and forever chased by suicidal maniac bent on killing him, then to have his girlfriend one of his most cherished things taken/killed. At first he seem to have everything, then after a series of events i think he's left somewhat more humble but a better character, however now his story is kinda over and he's just hanging around like Iori is in the KOF games.
Okay.. now onto the Kyo/Ryu/Terry thing..
I don't think it's neccessarily the whole SNK = Terry thing.. I think they did choose the best mascots from their respective companies. The thing is that while I know how popular Fatal Fury was it never really rivaled SF, it was cool and got noticed but the thing is that Super Street Fighter 2 Turbo is still being played in tournaments in Japan speaks so much about SF2 (like the recent Super Battle Opera Event). Whereas KOF became wildly popular in 96/97 I think. I think 97 even started to kill of SF popularity in the arcades of Japan. From 96-2001 I think KOF pretty much owned the arcades in terms of 2D fighting until GGX appeared. Garou was made to go up against SF3.. but 3rd Strike was never dethroned because Japan loves that game. Also KOF is popular throughout the world. Many US fans played Fatal Fury but never really played KOF, while outside of USA everyone know's Terry.. but people play KOF instead of old versions of Fatal Fury. Japan plays KOF, Hong Kong plays KOF (its hard to find anything else!), even Korea because 2001/2002 obviously caters to them (made by Eolith who is Korean). I believe its also very popular in Mexico (where Evoga or was that Noise Factory is from) and South America, and also in Europe too. I think since KOF became that popular is why they choose to pick Kyo as the mascot. While the whole racism theory might have some effect because Japan tends to be a very racist nation.
As for Kyo.. The main reason why I like the character is because of what he can do like his moves and abilities. I'd recommend it alteast to play through KOF over the years 94-2000 to see how he has evolved gameplaywise and storywise, by means of emulation or otherwise.. you never know there's a reason why people like him. I still like Terry, it's just that Kyo is cooler imo.
As for the FF/AOF teams in KOF.. it was there as kinda a dreammatch I think and also to create a new franchise. They haven't played much of a role in that series either, and I believe recently in Japan's popularity contest they actually wanted to boot off the FF team! Those two teams were never meant to take on a big role.. its kinda like those cameos characters make in other games. I think they never left because the characters were popular at first.
Even if the FF/AOF weren't in KOF.. I think would have survived.. the originals and cameos created for it were pretty good, and only FF fanboys keep asking for old FF characters into each new KOF game. Personally I'd rather see new characters created then getting more old characters rehashed.
Kyo Benimaru Goro K' Maxima Chizuru Heidern Clark Ralf Leona Whip Athena Kensou Chin Bao Choi Chang Heavy D Lucky
Brian Iori Mature Vice Saishu Yashiro Shermie Chris Shingo
Lin Seth Vanessa Ramon Hinako Kula Foxy K9999 Angel Mei Li
Rugal Goenitz Orochi Krizalid Zero Igniz
Most people who play KOF now days don't really care about the FF/AOF characters.. sure they're cool but really wouldn't miss them. They also have their own games too. The KOF versions of them have evolved over the years as well too so they play very differently from their original counterparts.