Was lord Dregg a physical threat to the ninja turtles.
 

I don't remember the turtles fighting him.

They fought him in the Shredder 3 parter in Season 10. Dregg absorbed all of the Turtles Ninja skills, and while having Krang sitting on his head, fought the TMNT.

So dregg absorbed all of the ninja turtles skills. That mean Dregg wansn't much of a fighter to begin with.He was more of a schemer.If Dregg was more of a badass i think peoples wouldn't had problem with him replacing Shredder.

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To say that Krang was "sitting on his head" is only half-right. He absorbed Krang's memories and mental prowess, and occaisionally, the top of his head took on the form of Krang; it wasn't Krang himself.

BTW, he'd also absorbed the morphing/fighting abilities of several alien bounty-hunters, as well.

When posessing all the Turtles powers Dregg was nearly as powerful as Karter in his mutated form. With the powers of those 5 aliens in Divide and Conquer Dregg was far more powerful than all of them combined.