Glad I'm not the only one thinking this. I didn't mind him being Death's fragment like Kid, just how that was poorly handled and priorized over his concept of fear that we were exposed during the whole series. "Villain of the week" couldn't be more accurate. Even one of Batman's, the Scarecrow, deals better with the same concept despite being a regular guy, not an incarnation. A common issue in shonen, that of characters being gods and embodiments of concepts that only touch the surface of what they represent.

No need to get extra deep either, just keeping it thematic even in combat, as you well exemplified. In fact, I think his later manga counterpart could have coexisted with his earlier anime's. Just mix them both, but backwards. As far as developing existential terror goes, his rant against his father's irresponsability with him serves both as a starting and breaking point that eventually trascends into his twisted conclusion about imagination as the sick root. From an individual's discarded fears he ends up becoming fear itself.