Mii Fighters
TL;DR
- Mii are not Custom Fighters, they are Mii Fighters - these are two separate options to toggle On/Off in Tourney Mode to make a point.
- When "Custom Fighters" option is set to "OFF" the Miii Fighters are still fully available without any of their moves restricted and only their custom parts will be disabled (i.e. Equipment).
- "Custom Fighters" is an alternative way of playing and includes Equipment as well as custom moves, all of which are Custom Parts to be unlocked with RNG farming in the fun minigames that come packaged along with the main game mode(s) to give a fuller experience to more casual gamers.
- Custom moves are not fully realized, only a few characters have their alt moves from their games, the rest of the casts' are just tweaked qualities instead so the game could ship in time.
- Not all characters even have any Custom Moves, probably due to time constraints creating the content. The argument to allow Palutena for any reason of "fairness" is obviously invalid.
- Custom moves + Equipment are more appropriate for Amiibo battles where you can sit back and watch the little toys have fun battling it out in a way to make each figurine more unique.
Palutena has her full custom moves available from the start not because the game designers believe she should be used in competitions with them available, but because they needed a kind of "demo" that showed how fun customs could be and motivate you to go grind for them in the minigames and on your 3DS when you see a fully "unlocked" character free of work - Palutena was chosen for the demo character (why her? Probably because Sakurai has a fondness for using his characters to promote game mechanics - he developed Kid Icarus: Uprising for the 3SD where Palutena plays a major role in the game's story and dialogue).
TL;DR
For those of you tuning in late or completely oblivious to what competitive theory states: the above basically tells us:
Palutena is the demo for custom fighters to motivate you to unlock all those custom parts to be used for fun and with your Amiibos and was not chosen for any competitive reason despite frame data and character reveal trailer speculation.
Mii Fighters are separate fighter types than custom fighters, which you can use with Custom Fighters OFF; this is further demonstrated with Tourney Mode where Mii Fighters can be Toggled OFF separately from the Custom Fighter option.
Palutena is the demo for custom fighters to motivate you to unlock all those custom parts to be used for fun and with your Amiibos and was not chosen for any competitive reason despite frame data and character reveal trailer speculation.
Mii Fighters are separate fighter types than custom fighters, which you can use with Custom Fighters OFF; this is further demonstrated with Tourney Mode where Mii Fighters can be Toggled OFF separately from the Custom Fighter option.
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