Actually no, they didn’t do that.
Gerald lost against Alex in the semi-finals. Alex then proceeded to beat Balrog in the final. That match is still canon.
They simply retconned Gerald being also an Alex opponent, before his loss against Ken.
In short: yes, you are overthinking it all. 
And again: Kevin is a boy.
The fans submit their ideas using Twitter, and during the podcast Mika and Nadeshiko polish the profile of the most interesting one, then finally Kiki draws him/her.
The ideas have to be rough sketches at most, NOT complete profiles like @“Darc Requiem” would do… After all, Twitter is VERY limited. On the site they make two examples: “An Italian gothic lolita stronger than Gief #SF研究所” ("#Street Fighter Research Institute". It’s the hashtag for the “create a character” corner) and “A futuristic ninja who uses ESP #SF研究所”. Yes, they’re SO horrid.
Here is Kevin’s profile, just to give you an idea:
Kevin
A character born in the “Street Fighter Study” corner
of Iwashigahama Joshi Pro Wrestling Podcast!
For details about the First Podcast, please hear us here¹ .
Apparently, he can use a V-Trigger that allows him to miniaturise himself!
²
Name: Kevin
Height: 3~155 cm
Weight: 1~40 kg
Blood type: 0
Birthday: December, 13
Home Country: A Foreign Country
Favorite things: Sushi, Japanese Language
Dislikes: Demons
His special move allows him to miniaturise himself!
Then he can use his speed to quickly gain his opponent’s back
and stab him with a needle!
But… He uses a foreign object¹! Is he a heel¹?
He’s a 13-year-old middle schooler. His favourite word is "Japaaan!"
Also ridiculously good-looking!
Here’s the sketch the fan made:
http://i.imgur.com/e6nMFde.jpg
The fan expressly requested for him to be a “Good-looking blonde kid”, contrary to the sketch.
¹ Since it’s Mika speaking here, a good part of it is in wrestling-related lingo. The only thing somehow funny.
² Kevin is brandishing a needle, and behind him there’s a Wadōkaichin, the oldest Japanese type of coin, roughly 2,4 cm in diameter.
