According to what Kurosune says, it's not the right implication. And it also makes sense to me, since it doesn't make sense for him to imply MC is hot, except for her face. And she is totally a lame bumpkin, likable lame bumpkin but totally, unquestionably it fits, so it makes all the sense for this guy to insult her that way.
You're free to go over the whole concept of localization, if you like, because a localization that adds sexual element where there wasn't one is bad.
EDIT: I found some examples in Japanese Yahoo of イモ女, here's Google Translate:
It's very clearly about being lame and unfashionable, not about "liking her body".
I mean, Sumire
is hot. We've seen her. Look at the first volume's cover art and the few times we've seen her in her suit. She's slim, sure, but she's genuinely shapely. She just doesn't dress in a way that shows it at all. I can easily see a teen-movie makeover on her to make glasses guy fall for her or something, you know?
But again, the point of butterface is its a judgement on her femininity and desirability, while calling someone lame and unfashionable is a general immature insult. Calling someone's style whack isn't a comment on their desirability, but instead often their economic status and social bearing.
From the thing you quoted, being a "potato girl" is something women are called derisively and dismissively, something to say that they look bad and are undesirable. I'm not going to do a deep dive into the nuances of potato girl because I don't have time to learn that stuff man, but from what you posted, being a potato girl is more than just having a bad fit. They talk about posture and makeup and having things match well. The first lady who calls herself a potato girl says she has a plain, ugly face. It's not the same as calling someone lame or unfashionable, cause that's got an entirely different feel.
So to me, the options seem like they're 1: translate it as lame and unfashionable and miss that it's a specific, gendered insult based around her looking bad, ugly, and unbangable, 2: translate it as 'potato girl' and then have a post-credits explanation as to what that is, or 3: translate it into a gendered insult about her desirability.
1, aside from the problems already spoken about, has another flashing problem: Sumire
is unfashionable. She's got a simple and plain style, which is part of her charm. She's extremely normal and unassuming, which is why it's easy to root for her. Instant, open anger and hostility would feel strange, because that would sound like a thing that Hazuki could say to her as a joke, not something she'd get instantly offended by. The second option would be interesting for sure, as well as educational. I like that idea. Except it doesn't actually get across what he's saying and why the other two are so mad, and we enter into TL Note: keikaku means plan territory here.
This team went with 3, and I like the decision. I think the best option would've been doing 3 and then putting the explanation of potato girl in the post-chapter notes, but that's literally all the work for little benefit. Calling her a butterface shows that he's crossed a damn line by calling her unfuckable right after meeting her, instead of him being a prickly jerk.