Newtwo is obviously much smaller than Mewtwo is, which is atypical for Formes. But that doesn't surprise me, as it makes sense that Mewtwo would return to its roots as a Mew offspring. Presumably, this is what it would have looked like if the experiment hadn't gone too far for whichever unexplained reason (considering the huge dissonance between Mr. Fuji's kindness and the crulety to which Mewtwo was subjected).
I think that Mr. Fuji will find a way to undo the damage of the horrific gene splicing. Mewtwo only thinks only of defeating its foes because its battle abilities were raised to the ultimate level, but that may not have been a necessary outcome. Perhaps Mewtwo didn't need to suffer so much to become stronger than Mew.