You’re right. I was so focused on the “Makuta” aspect of it that I completely forgot the Kraahkan was considered immoral for other reasons.
Actually, now that I look at it, that goes for the rest of the Makuta masks as well; most of them were considered immoral for non-Makuta reasons.
The only two immoral masks that are immoral purely because of their Makuta association are the Shelek and the Felnas. So to me, those two should be allowed because they would not have been immoral when the Hagah were created.
Otherwise, I’m indifferent to disallowing Immoral Kanohi (as long as it is their power that is immoral, not just the fact that a Makuta wore it).
When it comes to setting the final shape of the masks, be it through Art or MOC, I think all we can do is set a list of disallowed masks, rather than an allowed list; custom masks, or otherwise never-before-seen-in-Bionicle designs should be allowed to be canonized. The only disallowed masks would be the organic ones, Nuva masks, Legendary masks, Immorally-powered Kanohi, and the Avohkii.
Finally, however the contests get done, whether it’s MOC-only, or the usual two-stage setup, or even a free-for-all, I think the format should be decided upon before the contests start, rather than changing based on what mask won the MOC Contest. As well, it needs to be consistent for all types of masks; if a winning MOC Kaukau is considered canon, then a winning MOC custom mask should be considered canon as well; if the Art section is allowed to change a custom mask, then it should also be allowed to change a Kaukau to something else. (assuming that there is even a two-stage setup)
Because again: with the exception of the disallowed masks, all Kanohi are equally “standard” in canon, even if we have never seen them before.
Personally, I would run it in the usual two-stage fashion, except the MOC masks are canon. Then, even though the canon masks are aleady set by the MOCs, you would still have an Art Contest, both to eliminate any potential “custom parts on BS01” shenanigans, and because the Art is usually pretty cool. Note that, in this case, the Disallowed Masks List would be implemented for the MOC section.
Maybe the Art Contest could be a single contest for a group shot of the four winning MOCs plus Norik and Iruini? That would cut down on the number of contests being run at a time. However, if it were done this way, the MOC masks would need to be canon, to avoid a situation where someone prefers the Kualus mask in one group shot, but the Bomonga mask from another; each group shot would show the same masks.