From Shoryuken Wiki, Marvel vs. Capcom 3 Strategy and More!
Leduc, like his sister Hive, calls Lab 8 home. After a standard ASG Labs story, his arms and legs have been replaced with bionic weaponry and his body has been bound with the synthetic parasite Taranis Generator. Unlike Hive, Leduc actually makes an effort to keep up with Dr. Avian's scientific literature. He can't really follow it, but the level of admiration suggests Leduc wants to follow in the doctor's footsteps and may see him as an adopted father figure. Avian's death in Peacock's story mode is more than enough motivation for Leduc to fight as a DLC character.
The "Nightmare State of Leduc" is actually a term from the slaughter of livestock and the only hint to Leduc's abilities in combat. The state occurs when an animal is improperly electrocuted, inducing a waking paralysis instead of death. Animals in the state can be slaughtered while conscious, yet immobile and completely silent. While this all sounds completely brutal, how might Leduc use the concept in combat? The discs on his metal arms may swing out, attach him to his opponents, and allow him to deliver electric shocks. Magnetism and electricity are closely related, so he may take after Tager and polarize his opponents to get close. Leduc's earlier concept art gave him arms more closely resembling vices or tongs, which are complete metal hands now. Leduc make take after Spencer if he can extend them to grapple long range or possibly use zip lines for mobility. The spiked metal legs have a much more direct uses. Whatever the fighting style, Leduc will need to use everything he can to protect his bishy cyborg face from the existing cast of unimpressed female fighters.