Good timing Super. I actually doing my 23rd Budokai breakdown right now and I just asked myself this question. It's apparently more complex than I thought.
First question, do we think Chappa stayed for the whole fight, or left immediately in shame. It could go either way, he could have been embarrassed and got out of there quickly or he could have been in amazement of how he could lose and stayed to watch how it all played out. I will admit, it is hard to imagine Chappa staying for the whole tournament as a spectator, watching amazing ki blast feats and bukujitsu and other absurdities and for him to come in cocky like he did in the 23rd Budokai.
I think it's most reasonable for Chappa to have improved enough to beat the Goku who beat him. However, are we nerfing here? King Chappa's starting power is absolutely incredible. He's well above Tao Pai Pai for Christ's sake. If you gave a guy with power like that a mission in life, as in becoming stronger after being previously humiliated, he could absolutely get way stronger imo. If Krillen and Yamcha can make 10 fold gaps like crazy, what's so different about Chappa? He seems to be an all around superior warrior than those two if they weren't in the Goku gang.
Let's look at the context.
(As Goku faces off with Chappa)
Yamcha- Now we find out how much better he's gotten.
Seems very similar to their last meeting. They are using this fight as a guideline to Goku's new strength. No need to get into Chappa's quote for this post, we all know he's confident he will beat Goku.
(After Goku knocks out Chappa)
Yamcha- And I don't think he showed any of his real strength at all.
Piccolo- Even if this isn't his real power... Still I see nothing to suggest a warrior that might stand against me.
It's crazy they are having these kinds of comments at a time like this, beating Chappa means nothing considering how powerful Piccolo and Goku previously were. I mean, Piccolo doesn't think Goku got any weaker here right? Meh, this kind of power statement from Piccolo at this point is bad writing. Yamcha at least didn't see Goku vs Piccolo and could possibly be comparing things to 22nd Goku. Anyway.
Honestly, with those quotes, it seems better suiting for Chappa to be above 22nd Battle Level Goku, to make those quotes make any sense at all. In terms of being reasonable, no, Chappa should only have marginal improvements.
So I don't know, I'm going to have to think about this a bit more. If we take the story point blank, it's Chappa > Battle Level Goku, I guess it's just hard to swallow. Hell, Krillen, Yamcha and Tien being Piccolo Daimao's level is a hard sell as well, I guess Dragonball is just hax city.