I feel it is disingenuous to compare this to League of Legends' model. The big difference is that in LoL, you can buy characters with in-game currency earned from playing the game. The only thing you can't buy with earned currency are cosmetic skins for your characters. So while you might not look as fancy, you're never at a tactical disadvantage in-game just because you haven't sunk a wad of cash into it.

KI:3, if I remember right, only gives you two characters to play for free, and doesn't stop opponents with bought characters from playing you. I presume KI, like most fighting games, have attempted to balance the characters; this may alleviate the point somewhat. But typically they never get the balance quite right for all skill levels. That is, Alice and Bob might be equal at the top-level competitive play (and even that is a stretch in most games) but at the beginner's tier, Bob is way stronger. A great example of this is strong & slow characters versus weak & fast characters. The faster characters are typically better for beginners as they're better for button mashing and missing an attack isn't as detrimental to your health bar.