Eh I prefer their approach. Instagram already has too much crap in it, so adding a twitter clone into it would just be one more thing to bulk up Instagram, and from the Threads point of view, I'd like a new Twitter clone to be simple and dedicated, not a feature slapped onto the side of the Instagram app.
It seems this thing's only real association to Instagram is that you use your IG account to login, and they already have your social graph to import if you want to.