GM discretion, definitely. The method's there for a reason. First of all, if you only allow pokemon to be caught if it's a decent post, that would make the RPers try their hardest in order to succeed instead of just plopping out a post whenever they can. Secondly, this way you can also control their power relatively easy, making sure that none of the Rpers will have overpowered moves and levels. Imagine if it's all free and a trainer teaches his pokemon four powerful TM moves. When you want to stop him and tell him to change, it'll be troublesome for everyone. Prevent > correction. I've seen Freedom-system'd Rps and pro-GM ones...I can say that the latter is safer.
However, I do worry about one thing - the RPers in our Novia thing don't seem to be that active. Like Yoshi for example. If there's one thing that's going to completely destroy an RP despite how good it is would be player inactivity. Trust me, out of 10+ RPs I made, only ~3 made it through as most people had poofed from the site mid-way.