Honestly, that was something Nintendo made an error on with MK8. It should've forced default Miis in that case.
But if you're forced to use the default Miis, they'll always be treated as medium-sized characters.
Pikachu would have been top tier if custom moves were allowed. Some were extremely uselss ( Jigglypuff's Spinphony is literally a joke ) and some are kind of over-powered in a bit ( Pikachu's Heavy Skull Bash being almost a kill confirm which can kill at somewhat low percents even, by using up air to that move ). It is also a really good recovery option. Source is here ( ESAM Video ).
Either way, custom moves are good for casual. I do agree that the competitive scene should either try it out or the developer ( hopefully Sakurai ) will fix the custom move-sets to make them more viable.
Yeah it's true that some custom special moves are just too good to not use. For one example, Charizard's Dragon Rush is far less risky to use than Flare Blitz, despite having no heavy armor, and being less damaging overall; you don't have to worry about any damage penalties when using it. Similarly, Wizard's Dropkick improves Ganondorf's normally poor recovery, despite being less powerful than Wizard's Foot.
In terms of the bad custom special moves though, Spinphony isn't the only impractical custom special move out there. Warlock Thrust is also up there for being among the worst custom special moves, as the sweetspot KOs later than even Ganondorf's weakest standard attacks (the attack's KBG is just too low), and the ending lag is longer than that of Warlock Punch. Likewise, Wizard's Assault has no real advantage over Wizard's Foot and Wizard's Dropkick.
But of all the special moves that need a good deal of attention, King Dedede's Jet Hammer is pretty much up there, as even the default variation of the attack is inferior to a clean hit f-smash and its knockback capabilities; while a fully charged Jet Hammer may deal up to 38% damage, it KOs later than Kirby's fully charged Hammer Flip, due to having low BKB and KBG values (5 BKB + 66 KBG). And while the idea of implementing super armor onto Jet Hammer may seem like a good idea, reducing the attack's damage output is a terrible trade-off, making Armored Jet Hammer drastically worse than the default Jet Hammer, especially with the increased start-up lag adding additional insult to injury.
With that said, the custom special moves do have potential, but the real challenge is just trying to make them all viable to use in casual and competitive play.