I haven't watched the vid yet, admittedly, but I'd say no, it shouldn't, so long as we have some limitation on the size and complexity of the character models. then it wouldn't make any real difference whether we're displaying 10 characters that all fit a certain template, or 10 different characters from 10 different models.
The main thing is size and storage space - we have to store those models somewhere, and having each player be able to create their own model would require a massive amount of storage space on the client computer. Perhaps some sort of model life scheme or something, where the model is automatically deleted after it hasn't been encountered in a certain period of time.
Alternately, we could do something like Spore, and have procedurally generated models. That would make it very easy to store and transmit the models, since the actual graphic model is generated client-side. I'll have to watch the vid to see whether that's possible from the program or not, though. And I got enough shit up in the air right now.