What does a defensive, footsie oriented Dudley look like? Is that even the best way to play the character? Once again, Dudley's mid-range is unexceptional
A defensive Dudley would wait at a range where stHP, crMP, crMK, and stHK can effectively counterpoke normals that an opponent attempts.
The issue with "defensive" counter-poking as a strategy is that
1) you have to be at the perfect range for it to work
2) the opponent has to press the button at the moment you're looking for it
3) the opponent has to press -the right- button [ie, Dudley's stHK will counterpoke E.Ryu's stMP or stHP, but not his crMK, Dudley would need to use crMK or crHK for that]
This is a lot of work that can fail if the opponent doesn't fall for it. Most players would say this is too much work.
Except that Smug does this stuff -routinely- and it is one of the reasons he makes Dudley work well in the first place. Defensive counter-poking is one of the cornerstones of footsies and any player that wants to be ACTUALLY GOOD at Street Fighter needs it in their repertoire.
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Smug did nothing wrong in his loss to Daigo. What he did was make certain decisions that Daigo was able to play around. It's possible that Daigo made good predictions of what Smug would attempt, and it's also possible that Daigo played over Smug's head and when Smug tried to adapt Daigo was one step ahead. Or both of these might be true. In either case, the problem is not with anything that Smug can practice nor is the problem with Dudley.