If people read "fury" as "furry" then that's a literacy problem.

You’re right.

And if you can’t understand why almost everyone will read ‘furi’ as furry and not ‘fury’, then you’ve got a phonics problem.

As someone who reads/watches a lot of Japanese media, "fury" isn't how I would first read "furi".

I do like "FuriOS" and think it avoids this issue, but other portmanteaus might be better avoided.