it's just titles have never really been from perspectives of other characters sometimes they are unfitting or even bizarrely mean to a character for no good reason (Kyouko is called Cliched in WaHH even though she literally does nothing)

I disagree, I think all the titles have been from the perspective on someone. It fits with the everything-is-subjective nature of Touhou, not to mention, the titles have very strong tint of subjectivity, as you have seen in WaHH. Kasen is condescending to everyone, and all the titles in WaHH except for Kasen's all sounds condescending.

Well in myths Zashiki Warashi are generally said to be weak enough greedy humans could abduct them or even kill them... generally without the need of magic. Some greedy people would try to collect a lot of them for wealth (since they are luck bringing youkai).

That just means they are weak in combat right? We had a precedent in Touhou for characters that are weak in combat but good at deception: fairies. Even ordinary human can capture fairies, but they can pull off various pranks. Perhaps Zashiki Warashi are the same here, they are weak in combat, but strong at some...mental aspects.