That would have been good on multiple levels.
As a threat it would have made him much more scary thst he's not just a dude, he's a fucking spirit manifesting itself to the masses like that.
As a source of conflict itactually would've been really biting that korra's first major villain after a season setting her up to be this headstrong hubris filled fool is someone essentially above her going "you're a fuck up and you're fucking up" and that would make the conflict a lot more internal than just beating up a bad guy, you could have even had multiple characters like that building up to the idea that like a good chunk of the spirit world just flat out thinks she sucks, launching her on a quest to find more spiritual balance.
It would have also given the setting a lot more weight to be this industrialized place where spiritualism is slowly being killed off by raw capitalism and mechanical progress and how spiritualism actually doesn't have a place in the world like it used to, thus making her spiritual journey a lot more difficult.
They could've done a lot with this series if they had just accepted that korra was a flawed character and instead of trying to justify her being flawed, if they actually used those flaws and worked it to their advantage to make a more interesting and fitting story.