It could count as any and all of those, depending on the nature of the defeat.

To be more specific: it's badass decay if the hero killer only loses because it doesn't fight at it's usual power level (especially if it loses to a hero it's beaten in the past who doesn't use different tactics than they did in the first fight); it's a crowning moment of awesome if the hero beats the hero killer by using excellent tactics or putting in extreme effort (i.e., by being awesome) even though the killer fights at its usual power level; it's the Worf effect if the hero killer starts losing fights just to prove how badass the person beating it is. For the record, I'm pretty sure the reference to invoking the Worf effect in the entry is intended to mean that the hero killer takes advantage of the Worf effect by smacking down powerful but not A-list heroes to prove how tough it is. The hero killer can certainly become a victim of the Worf effect, but I don't think that was the intent of the entry.

Take it to Trope Repair Shop, then.

No, I believe that's The Dreaded. So I think I'll be removing the MLP example in the Western Animation folder.

I don't see why not. As long as the heroes are terrified of him/her and the terror is caused by his/her ability to kick ass I'd say it counts.