My experience with character creation was good the way it is. All of us have our own strengths, weaknesses and preferences, so I understand why it could benefit from some changes to it. I'll share some thoughts.
Thoughts about lowering the initial requirements to name only
I think, at least a portrait or a small description should be a requirement. I agree with the concerns listed.
Brief biography requirement
Depending on how a person approaches character creation, biography (even a brief one) can be a big challenge, so I think having an option to chose from either listing some personality traits or biography as a requirement would be neat.
Rank 2 requirements
Having only AP requirement for rank 2, while the challenges from the tutorial being required only for participation in the type of challenge they are teaching. I think, it could help people, who have preferences for certain types of challenges.
For example, if a person is struggling with backgrounds (I won't be surprised if such people are more common in a community focused on characters), completing a portal could be a big challenge they may not be ready to take on, potentially discouraging them from further participation. This situation creates a barrier for rank 2 progression, which in turn prevents them from participating in battles (the type of challenge with the lowest requirements).
Battles available for rank 1
I think, it could be a nice change. Battle requirements are very low, so making them available early on could make the game experience more accessible and positive for new people and people seeking simpler challenges.