I don't think it's totally power-related (though it is somewhat power-related, in a way, more on that later). It's more character-related, though that's a bit of a poor way to word it. I think it's more related to Cell's intentions, like Clearin has already said. #17 and #18 are stronger than Freeza and more threatening from purely a power perspective for instance, but they didn't even want to do anything besides have fun and kill one major character.
Think about it. Just the statement on its own. "Terrible" is often a way to describe huge power, but it seems pointless to ask "are you ready to take someone stronger than Freeza?" knowing that Goku had quite literally planned out the last 3 years for exactly that, and yet Kuririn does ask that, so I don't believe it's as concrete as "are you ready to take someone stronger than Freeza?" It adds even less - if you interpret from a pure power sense - when Piccolo had already asked a more effective version of the question earlier: "You ready for these androids?", "I dunno, I'll know when I get there." It already goes without saying that he is excited and afraid of someone stronger than Freeza. Actually, I take that back - it goes with saying, before Goku even trained:
http://i.imgur.com/Bxp2AML.jpg
Not everything has to lead to a strict power chain.