I don't understand KI's neutral game. How can you play footsies when everyone has on-reaction 5-frame full-screen punishers? I whiff a jab and I get punished. It's even easier to punish fireballs on reaction, making them useless for zoning.

Yeah, it's pretty tough, isn't it? KI has strong offensive tools.
There's a few things I think are important to know:
1) Shadow counters are great. Most really strong offensive tools are susceptible to shadow counters on block, which means that even though they are safe on block and invincible to lots of stuff, they have weaknesses.
2) Most horizontal traveling moves, while safe on block, are negative (usually -2 or -3, some are even truly unsafe like TJ's tremor and Cinder's MK trailblazer), which means they are giving up their pressure when blocked. Putting yourself at negative frames isn't the end of the world, but it does mean that they need to block/backdash themselves after doing this move, or else risk a reversal or something; pressing more buttons afterwards is usually a recipe for getting hit. There are very clear moments of "now it's my turn" in KI when dealing with horizontal special moves, even if you don't get a strict punish.
3) Combo breaking works well in the KI engine because the tools are often *so* overwhelming that the game designers just expect you to get hit sometimes. It's why combo breaking is something all players need to get used to, because it's not just "a failsafe if you play bad", the game is fundamentally designed around it.
That all said, you can still play some really strong footsies in KI, once you establish a few base things (you can shadow counter obvious pressure, you will take control of the match back after your opponent puts himself at -2), but like all fighting games, if you're looking to play footsies with your typical online player, it might be hard to find the meat. It also might resolve itself a little faster than other games (like SF4), because the strong offensive tools means somebody will win the footsies war relatively fast. But the footsies game is definitely there.