Regarding Terastallizing in Draft Leagues
I'd like to very clearly start with stating that one of the great things about Draft Leagues is that every single league can use and enforce the rules that they, and their participating players, have agreed on. This means that there are draft leagues where people have only played with the Pokémon available in the Gen VIII games, leagues where people have used all Pokémon available from Gens I-VIII (including Megas), and even league where moves that have been cut from the game (such as Hidden Power or Pursuit) are allowed and usable within these leagues. I am a great proponent of all these leagues, as this means that there is a league for people with all kinds of interest. I haven't even mentioned yet that there are draft leagues with different ban lists, doubles leagues, Little Cup leagues, etc. Draft Leagues come in all shapes and forms.
That being said, I am here today to speak on behalf of allowing terastallizing in Draft Leagues, albeit in a restricted format. This is merely aimed to inform and advice owners and admins of Draft Leagues (as well as perhaps spark a discussion), and I of course expect that people are going to agree, disagree, and will organize and play in the ways that they prefer.
Precedents
Before Gen IX, there have been multiple gimmicks. Gen V had gems, but I am going to skip Gen V in this example, since, to my knowledge and experience, Draft Leagues only rose to prominence (and perhaps even existence) starting in Gen VI, XY/ORAS. In this generation, Mega Evolution was introduced.
From what I have seen, read, and experienced, leagues generally allowed players to draft 1 Mega Pokémon (either from a pool of Mega Pokémon, or, in a points based system, having these Megas all be worth some amount of points out of the total amount of points available to the players to draft from). This in itself was a slight restriction, though I doubt many players would see it this way; drafting multiple Mega Pokémon generally wasn't seen as optimal, since this Pokémon had to hold the Mega Stone, and it would mean you could only ever Mega Evolve one of these 2 or more drafted Megas. Mega Pokémon were not generally regarded as a broken mechanic, though some Mega Pokémon were individually banned from most Draft Leagues, such as Mega Lucario, Mega Salamence, or Mega Metagross. The banlist of course could be different from league to league. There were also differing rules between leagues whether or not you had to Mega Evolve your drafted Mega Pokémon on the first turn it went for a move or not. This was particularly interesting in regards to Mega Diancie (which goes from base 50 speed to base 110 speed and loses a lot of bulk when it mega evolves) and Mega Gyarados (which has a ground immunity as long as it is not mega evolved, and gains a psychic immunity -as well as bulk- when it does). There are other cases, such as Garchomp having 10 more base speed before Mega Evolving, or Mega Altaria having access to Natural Cure before mega evolving, but I think the point stands: There is a definite competitive difference between having to click the Mega Evolve button the first time the Mega of the team clicks a move, and not having to do so. This rule, regarding whether or not players have to Mega Evolve the first turn they clicked a move or not, was still discussed in generation VII, where Mega Evolutions reigned supreme still. Proponents of the rule said that the players specifically drafted the Mega Evolution, not the base form, and were therefore not allowed to stay in the base form. Opponents of the rule said it took away some part of what makes competitive Pokémon competitive: Making choices that influence the state of the game. I am not here to argue either way.
In generation VII, Z-moves were introduced. This was yet another strong mechanic introduced that leagues handled differently than others. Most leagues I have seen, have decided on having players appoint one (or more!) "Z-Captain(s)". This means that only this or these Pokémon were allowed to use Z-moves. This restriction was placed on many Draft Leagues for the reason that they felt it was impossible to make a counter draft against all possible Z-moves. If they know what Pokémon can carry the Z crystal, they can prepare for it in their drafting. Of course, the teams often had quite obvious Z-move users of choice. Kartana, for example, was a great user of Z-moves, since it very simply allowed it to power through it would-be checks, such as Zapdos, Tornadus-T, Mega Scizor etc., with the likes of Z-Giga Impact for a 200 base power move or Z-Sacred Sword for a 175 base power fighting type move. Even the choice to allow Z crystals in this format is, to this day, discussed about whether it is broken or not. Something else to consider in generation VII is that the fact that all teams could have a Mega Evolution and a Z-Move user on the same team, nerfed Knock Off and Trick as moves, since Knock Off would be 65 base power rather than 97.5, and also did not knock an item versus either of them, and trick would flat out fail versus either (making it a harder move to lock into on choice users). Z-moves have been, and still are, incredibly powerful tools that allow sweepers or wallbreakers to get a kill on their opponent with more ease, and also call for more guesswork. Even if you know the Pokémon in front of you is carrying or can carry a Z Crystal, that does not mean they have to click it this turn. They can still predict you to switch on the Z-move. This can definitely call for 50/50 situations. Another thing about Z crystals, is that many different leagues banned the usage of omniboosting Z-moves, such as Z-Celebrate, as this was seen as uncompetitively good; broken. Some leagues banned the usage of Mewnium Z, others did not.
In generation VIII, things start getting a little bit wild. With the introduction of Dynamax and Gigantamax comes the strongest mechanic yet. The added bulk, the added power to the moves and the additional effects moves get, made Dynamax and Gigantamax very hard to argue in competitive singles. Giving a single Pokémon all these boosts without drawback (no item restriction, as was the case for Z-move/Mega) made it too good. I have personally not seen a single league that has allowed dynamax in a serious setting, though I would be surprised if they didn't exist. I have followed VGC loosely, and have seen and understood that in a doubles format, it seems fun and at least somewhat balanced. In singles, it made it way too easy to sweep the opponent with the offensive or speed boosts when paired with setup moves before Dynamaxing. Pokémon even became immune to weight-based moves such as low kick or grass knot, which sometimes is the only good coverage option opposing Pokémon might have for the Dynamaxed Pokémon.
Current affairs
As it stands, the OU council and Smogon as a whole is discussing on whether or not to allow Terastallizing in their format. Now, regardless of what the outcome of that is, Draft Leagues are, and will make their own choices regarding Terastallizing. We have restricted the usage of Mega Pokémon when Smogon did not. We have restricted the use of (possible) Z-Move userswhen Smogon did not. We have played with the rules we deemed to be both competitive and fun. We have seen and showed that these rules work, and allow both opponents to create the best working draft against the other.
Why Terastallizing is not uncompetitive in Draft League
Unlike Dynamaxing, Terastallizing does not boost any stats. No bulk is gained upon clicking the button, and no extra benefits are to be had from clicking a move, other than its intended purpose of doing damage or doing its status. There is, of course, a difference in power in regards to a move suddenly gaining STAB whereas before it did not, or a STAB move suddenly gaining more power due to the opponent Terastallizing into one of their existing STAB types. Besides this, there is a huge difference in defensive typing, as a Flying type becoming Steel suddenly resists rock instead of being weak to it, or a Fire type becoming Grass is suddenly the one threatening the Water Type rather than vice versa. Mind you, this newly gained Steel Type Pokémon is now weak to Ground Moves, where it before was immune! This newly gained Grass type is now weak to Ice, rather than resisting it. The new typing is not perfect, though it often benefits the user in the current situation. I am not here to argue that Terastallizing isn't strong. I am saying we have a very easy power to limit it. The precedent is right there with Z-Moves: We appoint a Tera captain.
In draft, information is everything. Knowing what Pokémon your opponent could Terastallize, and preparing for this the best ways possible is, in my opinion, the heart and soul of playing in Draft Leagues. We have previously seen that by taking away much of the guessing factor by appointing a single (or a few) user(s) of the mechanic, preparations can be made to try and counter this. Z-Captains were, if I may be so bold, a success. Yes, they were powerful, but also limited and could be seen coming from afar. If teams are allowed to appoint a single Tera-Captain, I think this can turn out to be fair, competitive, and fun. Something to keep in mind is that there may very well be some Pokémon that become too strong to handle with Terastallizing. We can only truly find that out through testing and trying. We can also ban these specific Pokémon, or not allow them to be chosen as Tera-Captain. The fun part of Draft Leagues is that we can complex ban anything we want, unlike Smogon.
Additionally, Draft Leagues can themselves decide on whether or not Terablast should be allowed in a League where Terastallizing is allowed. I myself think this adds on to the fun of Terastallizing, but I can understand opponents of this move, since it gives Pokémon infinite coverage moves.
Give Terastallizing a chance, in the form of Tera-Captains.