I think custom characters would be an awesome addition, but only being able to change the model seems to be a very limited choice. Custom slots seem a little better, but it's nothing more than an original model change without requiring 50 minutes of downloading to get everyone's custom skin.
For a true custom character, what should happen is something like in Firearms (old mod, I know). You would select melee style, ki colour (Which can be disputed that PCJoe's new effects will take care of that), and select one powerbeam or ball attack + one special (Kamehameha, SBC, Spirit bomb, regen) and of course, senzu. Starting PL would be set to some low value and speed/strength/ki would be set to a default (eg: Goku's might be 8/7/9 Custom would be 7/7/7 (Customs gotta start somewhere) The 'custom' model could be made as a dummy (Just add in some kind of joe-nothing model) that just chooses the skeleton of whomever is selected for the melee style.
If someone would want to see custom models they could turn on 'download custom models'. Half-life (Original) had this option even with team-related model packs (and replaced custom chars with the hasmat suit model. (TFC) The option to have multiple slots open for custom characters is there. The hard part is implementing it.
Just my suggestion. Hope customs get added in, it would be sweet.