Regarding the brakes in FZ25, yeah the new brakes in any bike might lack initial bite as the brake pads need to wear a little. I suggest you take a TD from one more showroom before striking it off.
Though reports say heating issues are resolved in the new KTM series, I think that's in reference to the intended usage of those bikes which is clearly not riding only in traffic. So I suspect they'll still heat in the traffic, at least the 250 and 390. I suggest you stay away from KTMs.
If you want ABS and also want to stay away from Bajaj, then another option, a very good one indeed, is the CBR250R ABS. Its abuse friendly engine will definitely heat less than that of KTMs.