In all fairness to Khali, he doesn't have an "Arab" gimmick. He is and is billed from India. However, you are probably right. Most people probably think he is Arab.
The mid card back in the mid ninties wasn't overly terrible. You had Razor (In my opinion one of the best midcarders ever), Bigeloo, Owen Hart, Bulldog, all solid midcard talent. Plus Austin and the Rock were just starting to come into their own as midcarders around 1996. Come to think about it, the midcard was actually quite strong. The mainevent was really really poor with Hart, Diesel, Yokozuna, and HBK.
Yeah thats a good point about the midcard as all those guys are good. I guess I just remember the wrestlecrap more than anything. There were some really shitty gimmicks back then. About the main event, well I didn't even watch wrestling on TV during that era so I've just watched the classic matches that Hart and HBK had so maybe thats why I think they were good champs. I guess I can't really speak from first hand expirience here.