So what's the advantage over Sazandora or Latios as a Scarfer? It can't revenge-kill DDMence / Ono, the extra bulk is offset by a crippling Stealth Rock weakness, it doesn't resist Fire or Ground, it's weak to Bullet Punch and it doesn't have Flamethrower + U-Turn like Dora or Surf like Latios.
Its main advantage over both of them is its STAB Ice Beam. Having that as your BACKUP move is awesome. There are a lot of great Grass, Ground and Flying types that were added this gen and this guy hits all of them hard.
I guess the next advantage is its great defenses. This thing can even take priority moves its 2x weak to and OHKO back, whereas Latios is KOd even by moves it is neutral to. 125/90/90 and Dragon typing is nothing to scoff at defensively.
The SR weakness isn't as bad as you would think (in my experience at least). It's not mandatory anymore, and even if it was I would rather have Kyu's defenses at 75% than a lot of OU's at 87.5%. It might be a pain but its weakness to SR is far from "crippling"
It hits slightly harder than Dora, and its backup STAB isn't useless. I'll admit that Kyu is competing for a spot on the team with it though.
Latios is probably going to be banned (esp when Soul Dew comes out) so I refrained from initially talking about it. 130 base Attack sets Kyu apart from it, even if its only viable physical move is Outrage. Latios can only use Trick or a specialized Dragon Dance moveset to beat special walls, while Kyu can take care of them with no EV investment. Latios is also Pursuit weak and has relatively thin defenses.
I'm not trying to say that this pokemon doesn't have competition for teamslots, I'm saying that this thing has a 660 base stat total and two of the best STABs in the game. I don't see it falling into BL/UU any time soon, especially once they witness me wreck with it :D
Ice is a great attacking type in itself, but it offers almost totally negligible coverage with Dragon (Sazandora rarely uses Dark Pulse for a similar reason).
Ice Beam is stronger than Dragon Pulse and hits more things Super Effective. Kyu has the strongest Ice Beam in Pokemon history. It's not about neutrality, it is about knocking mons out. Ice and Dragon may overlap each other a bit, but with Focus Blast Kyuremu has perfect neutral coverage (except lol Shedinja). The overlap isn't as bad as you'd think in practice.
Ice actually isn't THAT bad along with Dragon, since most of the common Steels are neutral to Ice anyways. Nattorei (Grass/Steel), Doryuuzu (Ground/Steel), and Skarmory all attempt to wall it but wind up getting badly hurt. There are Scizors around, but they take enough from Draco Meteor. You shouldn't stay in on it anyways because of Bullet Punch, so that's a lost battle even if Focus Blast is there. Or you could just use lol HP Fire.
I never meant to imply that Kyu has no problems, it just has to predict one type and act accordingly. You can always just pair it with Magnezone if you're that worried.