Yes, apparently power fantasy is something the devs are accused of creating. The sexualization is something that seems to be created by a select fans.
Yes it has been pointed out before that he has been shirtless. The think that makes this logical from a design standpoint is the beard. He is a wandering warrior and if they want to portray him growing older while doing these battles, the scars and the beard assist alot in this regard.
If fans want to sexualise Ryu, more power to them. Let us not pretend though that this is the explicit intent of devs (unless you have some dev/designer quotes you would like to share) or that it is illogical for him to be portrayed this way.
I assume that it's the explicit intent of the devs because
a) Capcom has done this before and
b) They are already thinking about titilation in their games (unless you think R. Mika's design is just coincidence)