I think they were just trying to make a different, quirky character. The "Freddy" influence is something that is certainly there, and I'm sure they wouldn't deny drawing from it.
I feel that they simply fell on their face with that design. When I consider the amount of characters SNK has created, I guess it's inevitable that I'm bound to dislike a few of their designs, no matter how hard they try to make them all diverse and interesting. Choi just happens to be one of the characters I don't like.
Chin up, SNK(P), I still love you. And thanks for keeping that little bastard out of KOF 2003.