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I think Ballard is more of a true TE. He isn't going to force teams into match up nightmares.
Hernandez is a HUGE loss for this team. Devastating even.
One area where Ballard may even improve the team is in the blocking game. As you say, he's more of a "true" TE and has better blocking capabilities.
I think we're still able to take advantage of running the hurry up in the sense that our current personnel can still stay in and avoid substitution in terms of being able to block on running plays, while still providing viable passing targets too. As long as this happens, we should still be fine, especially considering that Ballard will be an upgrade over last year's "other" TE in an injured Fells/Hooman.
Like you said, obviously we still lose the versatility of AH and that hurts; but we can still take advantage of mismatches vs LB/S players. In the case of Hernandez, I think other teams were treating him like a pure WR at times, and actually lining up a CB on him, so there were definitely times where we didn't have as good of a mismatch as we'd initially believe; at least this was definitely the case vs the NYJ when either Cromartie or Revis were lining up vs Hernandez.
Maybe I am just viewing it too optimistically, but I tend to think that we'll still be able to do a lot of the things that were done in the past with AH. On what level that will work is obviously the million dollar question, and I expect to lose some of the raw talent of course.