A half hispanic Wildcat sounds perfectly fine to me. Perhaps he downplayed it during his boxing days at the behest of his promoter and feels shame for doing so? That makes a lot of sense. A coworker of mine brought up Hawkman and it'd make sense that, if they wanted to reboot him again, he could reincarnate as a different ethnicity. It makes complete sense given the narrative and does diversify the line. If DC wants to have Kendra be a reincarnation of Shiera, who is now one cycle ahead of Carter and currently Egyptian or African American, it makes sense given the narrative. It's when you reboot someone like Wally and just use his name on a completely different character that fans get upset over.
There are numerous examples of adding ethnic backgrounds or exploring sexuality with established characters and they work fine. There's a nuanced approach and it requires a careful case-by-case basis. Otherwise, there's always the option to move forward. Personally, Terry Sloane never worked for me. I prefer Michael Holt in just about every way. The great thing about that is you can tell great stories with Terry in the past (as Geoff Johns did with JSA) and not upend the table of fans who prefer Terry. I can't speak for everyone, but I have always felt Michael Holt was a great legacy character with loads of potential yet untapped. Still do.