Just doesn't feel green.

Plus, based on name I expected a cheap blue flyer that either lost flying or couldn't attack if an opponent controlled any creatures with flying

I don't mind if it doesn't feel green, since there are no cards in Magic that do exactly what it does, and the mechanic is very green (its an anti-flying card since it only works if your opponent plays with flyers... well, or if you play blue green and give your opponent flyers). As far as I'm concerned, if this mechanic was on multiple cards a couple of years ago, it would all the sudden feel like a green mechanic.

But you are right... maybe a bashful drake isn't the best creature type to put on this. I may be moving this over to my nightmare cycle, so this could change...

If both I and my opponent have one of these, do they have flying? (See the Oracle wording for Escaped Shapeshifter for Wizards' fiddly way around this... and in fact printing this would make that need to have errata saying "or named Fainthearted Drake".)

Hmm... That's a very good eye you have there, Alex. I don't know. It's quite possible that the Oracle wording is just old. They made rulings on cards a long time ago based upon what they felt should happen as opposed to what the card actually said. See also: Flying Carpet and Flash. I get the impression that someone at wizards noticed that if you have two of these guys in play, and there was another creature with First Strike in play for one turn, and was destroyed, then both Escaped Shapeshifters would continue to have First Strike because they saw each other.

Is this a problem? I can see why it could get confusing on a shapeshifter that may or may not have up to 9 seperate abilities. But if both Fainthearted Drakes have Flying, it should be relatively easy to remember that, and seems a little funny... but it could be confusing, and would probably happen often at common. I'm switching it over, but I don't really know which way is 'better'.