I think they need to turn Cole into a single, stance character for the sequel, i get it's a good way to represent him and all that, but Cole isn't two seperate guys, he is one, and his karma changes, so the best way to represent him IMO is to have him as a singular, stance character. But that's just me. If sucker punch is insisting on two characters then i'm not too fazed.
A neutral Cole with both Evil and Good powers? Or even worse, a Cole that can change his Karma in real-time?
Like "I'm a good guy! *snap his finger* Now I'm bad!". In my opinion is better to have two separate Cole.
If Cole must stay 2 separate characters, theres only 1 way to do it. Do what they did with Sheik/Zelda (not gameplay wise). Make the actual character "Cole (Neutral Cole in the photo)" take up 1 roster spot at the select screen. Then when you select Cole, you'll be given the option of being GC or EC. Once you select them, you would then be able to select their costumes. Neutral Cole would not be playable, just there for show. Then they change up their movesets and supers a little and then you get a great way of keeping the 2 Coles separate while still pleasing those who wish for them to be 1 character since they are a waste of aroster spot or not different enough to be the same character to those people.
As for the Zelda Sheik comparison it isn't appropriate. Sheik and Zelda are one and the same, Zelda passes herself off as Shiek to avoid capture. She is still Zelda. It may sound similar to Cole's scenario but it isn't. Good Cole and Evil Cole are separate entities, they don't exist in unison. The existence of once means the other ceases to exist...in addition Cole must go through a series of decision and choices to become one or the other...he can change his karma but not in the blink of an eye...it isn't a costume like what Sheik is using as a disguise. Zelda is Sheik but Good Cole is not Evil Cole.
On a side note from purely a gameplay point of view I think it would be horrible. A competent Cole player is already difficult enough to deal with, Cole has numerous confirms and burst combos to kingdom come, could you honestly imagine him with a giga punch and those bouncing grenades as well? It would be havok.