Tohl Narita says in his artbook about Alien Cool, “I came up with the design from mite.”
I think the design showing the alien shaped like a spider positioned upside down is very much attractive with his big head seemingly showing his high intelligence as it implies the upcoming battles to unfold between extraterrestrial intelligence and the Terrestrial Defense Force, the theme predominantly featured in Ultraseven.
I think the design fully reflects their intention to make the new tokusatsu series Ultraseven totally distinctive from Ultraman, and the alien was sculpted by Ryosaku Takayama while one of its arms still exist even now.
Some characters worked out as puppets instead of costumes worn by actors appeared in Ultraseven although none of them were featured in Ultraman, and that seems to have made Narita happy as it enabled him to design characters more freely while costume monsters could impose various restrictions on the forms of the characters to be worn by actors.
Puppet monsters might be a feature of the tokusatsu practiced when no computer-generated characters have emerged yet, and it should have been an ambitious and innovative attempt to broaden expressiveness of the tokusatsu even though it was a means worked out to reduce the cost.
That being said, puppet monsters seem to have gained poor reputation from among us kid viewers who hoped to see excitingly fierce battles between the hero and the monster as puppet monsters fatefully manipulated by wires are utterly unfit for the job.
Especially, Alien Cool ended up being instantly beaten by Ultraseven at a single blow only with the scenes in which they fought remaining human-sized, and it made the alien less impressive among kids back then unfortunately.
The entire episode, however, can be found excellent with the scenes finely portraying the greatness of the TDF base including their futuristic equipment as it makes the series more likely to be a science fiction story than the preceding Ultraman.