We use the base form in 1.2 to decide who is actually the better player. It would be stupid to have a match in normal form, then in SSJ form, etc. Regardless of how "balanced" transforming may become, it is an advantage. The person winning the match is going to be able to transform first, so that doesn't really help the guy who's losing. It just turns a defeat into a blowout.
If transformations are ever a part of matches, we decide on the rules. Even in those rare matches in 1.2 that allow transing, we wait until the other person has completed the trans. If he does it during a fight, he gets killed. If he does it when he first respawns or after he kills his opponent, he's fine. That's how the rules are and always should be.