^ Yeah, I agree (with you, not him). You don't have to do the Penguin as a grotesque, a la Returns. He could simply be a short fat and ugly gangster, who hates the name. Make him something like a cross between Joe Pesci's character in Goodfellas or DeNiro's Capone in The Untouchables.
On the other hand, you could have him as a weapons dealer, as the original scuttlebut for TDK suggested or a society type who is actually a criminal under it - a sort of reverse Poirot.
Certainly, I would have thought that he's a more plausible 'real world' type villain than Ras Al Ghul or Scarecrow.