The argument is that in the official leagues pokemon created through hacked or modded software was (and still technically is) illegal. The notion is that building a Pokemon with perfect abilities, natures, and IVs were tedious as fuck back in the day, so for someone to show up with a 5IV 0 attack Timid Heatran not only raises flags but also is just so painfully on another level of effort without cheating. The reason GF is making conveniences like mints and caps more and more through the generations is partially to make it easier, but also to cut down on the necessity to cheat and making doing so irrelevant. They lost the war trying to control cheaters for anything that can exist naturally (pokemon with straight up modded moves, abilities, stats, etc that can't otherwise exist in the game vanilla are still controlled and detected, those assholes are scum anyway).
But the big question is "does it matter"? Here's the way I see it: no matter if you acquired such a good potential pokemon legally or not it is still a pokemon I would be fighting in a format regardless. Am I any stronger of a player to lose to something only to turn around and say "well he hacked for that, doesn't count"? No. Such a pokemon CAN exist and be clean at the same time, so what does it matter if this one was hacked? That combined with Ray Rizzo getting nothing more than a slap on the wrist for bringing an Aegislash in a Dream Ball back in XY (at a time when the only things with dream balls were dream world Pokmeon of gen 5) and getting caught at I believe worlds opened my eyes to how much it really doesn't matter.
You do you. It's like jaywalking, sure it's illegal but the odds of it actually causing harm or actually being detrimental to the game or spirit of is null and moot
>but the economy!
Look at CSGO. TF2, and other games that practice an online economy. There will always be long term problems and shortcuts that can be taken advantage of. Fun to participate, never good to rely on