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Ok, I am 74 Yrs old and played the whole series on an Amiga.
Really glad to find GBC for GOG for these old games.
I distinctly remember being able to REMOVE a character while in the TRAINING HALL and replace them with a different character.
While running the GOG/GBC setup, there is no REMOVE CHARACTER option.
Only the DROP option that banishes the character forever.

Am I missing something?
Yeah, I don't have any explanation for you. That would have to be a weirdly corrupted version of the game for it not to be present. In PoR, the remove function usually just hangs out in between 'Add' and 'Save'

If the function just flat out isn't there, try pressing the 'R' button and see what happens.
PoR is funnier than most. The PC version would often crash whenever you try to add characters who are in a party already, especially, you have to save and remove them. Basically never have your most recent version of a character in the character stock, always have a spare dummy save with them. I half suspect this might be trying to prevent that crash. Probably not.