To clarify, it's not that he looks like a monster. It's that he looks like something they perceive to be a monster. In BG3 you start the game fighting devils in hell. These would absolutely be perceived as monsters. If the PC wants to be open-minded, that's totally fine. But the game should at least acknowledge this inconsistency. That's good writing.
I just think that majority of people in Forgotten realms know the difference between tieflings and devils and tieflings are not something strange and scary to them. They probably would treat them with disrespect and not fear. But I agree that more dialogue options would always be nice, you can roleplay your character however you want. I actually think NPCs don't freak out enough when they see a drow lol
