The REAL Mandarin, Killian, was a great man of science, who showed desire to control the world's greatest powers, hence the line 'I'll have the two biggest weapons in each hand and own the War On Terror'(or something like that). We see at the beginning of the film he was a nobody, but through his knowledge (and probably his powers), he built himself up. He showed great hand-to-hand combat talents. Notice the other Extremis soldiers were not nearly as good at hand to hand combat, so he must have some training.
Now the COMIC Mandarin, was born in a rich family who spent all their wealth teaching him science and training him in the martial arts. By the time he was an adult, he was dirt poor, but extremely brilliant, like Killian at the beginning of Iron Man 3. Also like Killian, The Mandarin's strength is his knowledge of SCIENCE. This is what enabled him to study Axon-Karr and tap into the powers of the ten rings. He used his powers and knowledge to build himself up and desired world domination, often using Countries own weapons against them, like Killian's plan with Extremis, Iron Patriot and Iron Man. The Mandarin also is extremely talented in martial arts and hand-to-hand combat.
Killian as The Mandarin is very much a Nolan villain interpretation. Similar to how Joker isn't permawhite and Bane isn't a venom-out wrestler, Killian isn't a Chinese ruler with powerful rings. However, similar to how Ledger's Joker and Hardy's Bane represent all the major aspects of the characters themselves, Killian has just about everything from a characterization stand point that The Mandarin has and is. If Killian returned in a sequel with 10 Rings, he'd be a damn near perfect live adaption interpretation of the character.
The twist wasn't just a plot twist, and it wouldn't work for every villain. It was used with The Mandarin for a reason and it was to acknowledge the character's past in the comics and to critique the original, racist stereotype that the original character was. IM3 showed us the VISUAL aspects of The Mandarin character and turned it into a joke because thats what it is, a racist, stupid joke of a character. However, the character himself, which is a great villain, they showed respect to and made him the primary villain with Killian.
Also, this COMIC BOOK Mandarin looks almost exactly like Mandarin/Killian in the climax of Iron Man 3: