As the title says, do characters count toward min-unit size? For example, can I field a skink chief on a terradon and 2 other terradon riders as a unit? I can't seem to find a rule for it.
No they do not, they must be taken seperately so minimum unit size is factored before the character can join the unit.
Do you have a specific use in mind for the chief on terradon? Overall they aren't really worth it usually.. Big point-sink on what should be a cheap unit, shoots just as well as the rest of the unit, and doesn't improve their combat ability enough to allow them to take on anything that they couldn't already. You might be better off with just 3-4 regular terradons.
I've kitted him out with the ruby ring of ruin. My opponent has some tree-kin he loves to let hang back, so I want to harass them. It probably won't be worth it in the end, but I just enjoy trying out new "strategies".
Another very good combo for a terradon mounted chief is sword of hornet (ASF) plus the potion of strength. It is a very good method of killing nearly any wizard since you get 3 attacks with re-rolls to hit at S7 and the mount's S4 attack.
Assassins like that are good, but be wary of unit champions or other characters in there. They can issue a challenge, forcing you to waste the potion on a unit champ and probably making you lose combat and flee before you can direct attacks onto the wizard.
If I planned on doing that, I would take the unit upgrade for a chapion in the terradons. That way, the terradon champion could accept the challenge and the chief could deal his damage as planned.