He is, just from a different world.
We were not restrictive about which story it was chosen from. As it is, he will recognize names at best, but no one in person. Frankly, I can't see how he'll come off as anything but a mad man since no one else is from Fables, but there you are. It is the same with the other stories as well, and even down from timelines. If someone was say from Aladdin, and someone else's character came from the second or third, they'd have no ideas what was going on. Each story was an independent loop.
Indeed, this will make it easier if there are people who leave, because somone else could come in as the same character, but different time period. Bearing that in mind, these characters quite well remember everyone from their story, so while they have utter free will, they might still harbor feelings from their story. Maybe Snow White remembers thinking Prince Charming was dreamy. She might think he is a douchebag now, but then, soooo dreamy.
And that's an example. I don't think that Prince Charming is a douchebag.