Alright hello I am here to explain my points of view now that I am off mobile.
Since my initial post, a lot of people have brought up the reasons which I had for thinking the way I do. However, as I eventually thought about it over the day, I realised that this all together is just a super deep rabbit hole which all comes down to "define original", which is different for every person. As such, it's rather subjective to talk about what really is an "original character".
But enough of me trying to sound smart and mature, let's get into the categories and discuss them:
"Canon characters:"
Yes, this should be banned. Personally I know toyhouse as a site for sharing OCs and not for fandom RP, as mentioned in the original post. Posting characters which you haven't made shouldn't be allowed. Likewise for kinning and such. If anything, these should really be kept to bulletins if they're going to be on toyhouse. Even then a simple link to a wiki page would suffice if you were to say "Hey I RP/kin as this character, here's some info on them."
"Derivative characters"
There are quite a lot of categories regarding this one and I don't agree with banning all of them. However, some should be banned/discouraged from toyhouse. There again most of my characters would count as derivative, so I may be bias with my opinions.
Spoilering because long.
"explicit redesigns (eg. Naruto as a dog)"
Yes. I feel that this tackles similar issues to uploading canon characters, as it's literally just a canon character but "oh they're a _____". If nothing else has been changed, then I'd argue that toyhouse isn't quite the right place to upload them. However, upon thinking on it further, I realised that some of my OCs were literally just a canon character. As an example, I had an OC who was a female version of Cress from Pokemon called Cresslina. That was... The peak of creativity at age 12? Sometimes people just don't know any better and think that something they're making is super original when the reality is "it's cress but female." Or maybe they accidentally do that without realising it. I could suggest discouraging this, but then it would fall into policing people's OCs, which would make people feel uncomfortable.
TL;DR - Ideally discourage, but ban if need be.
I also think AUs fall into a similar category for this and ideally should be discouraged as well.
"characters that're described as an OC or sona but resemble the canon character in both personality and appearance or cosplay them 24/7"
For me, this feels the exact same as explicit redesigns and covers similar points. It's worth noting though that taking inspiration from canon designs and literally just making them cosplay canon designs are different. This should ideally be considered on a case-by-case basis, but I understand that this would take a team of dedicated moderators to do. Even then, one moderator may say it's okay but another moderator may disagree, making them unreliable. It may be easier to ban these sort of characters rather than moderator potentially hundreds or thousands of them.
TL;DR - Ideally consider on a case-by-case basis, but ban if need be.
"personalised playable MCs (eg. customised Kamui/Robin, Frisk, Gudako/Gudao)"
Now this is where the rabbit hole really starts. As an example, lets take Agent 8 from Splatoon. Agent 8 can be customised by the player to have different hairstsyles, skin tones, etc. However, Agent 8 does have 2 canon designs which are considered official and drawn quite a bit in promotional material. Now, some agent 8 OCs are very similar to these canon designs, others aren't. However, each person has a slightly different interpretation on their Agent 8. So, should we ban all Agent 8s? Or should we only ban the ones who are super close to the official designs...? Honestly, I think so long as they don't appear to be too similar to the "official design", then they should be okay. It falls in similar grounds to doll makers if anything, you're just putting your own interpretation to events which took place.
TL;DR - Don't ban, but keep an eye on those MCs with official designs if any.
"characters belonging to a canon species"
No, definitely not. Although if a character is literally just a canon species and has no personalised information or design details, then ideally the owner of said character should be nudged to include some detailed information to make the character not just another canon character. Of course this may be seen as pushy, and some people may not want to share information about their characters. It falls once again into policing other people's characters, which isn't fair on the creator.
TL;DR - No, don't ban. Though there should be some differentiation between other species and the character ideally.
"characters belonging to a canon setting"
Again, this should not be banned. Some design/backstory choices may be due to the setting, which is fair enough. It's totally possible to create an interesting character despite some drawbacks due to the setting, and this shouldn't be discouraged.
TL;DR - Don't ban.