First thing I noticed:
…we do have Cyndaquil...
You do have a cute Cyndaquil avatar :p
Sorry, I should've including a picture.
The Fakemon in question actually has magical/psychic powers granted by the ruby in his forehead. Cyndaquil/Quilava really wouldn't qualify.
Anyway, as for the actual question… I'm not sure. It'd depend on the genre of the story in question (which you don't seem to specify) and of what is the goal of the story - after all this is going to happen at the very climax of it, so the kind of transformation and the in-character rationales for it have to make sense and have to somehow lead to the resolution of the story.
The genre is actually fantasy. However, the transformations are supposed to get out of hand at one point, and the characters eventually get PO'd at each other. Both characters are supposed to be very intellectual or at least logical.
That said, given the nature of the Pokémon in question and that what you are describing is essentially a witchcraft duel in a nature similar to The Sword in the Stone I'd say go for something that inverts or twists the trend of the transformations, no matter if they were silly or devastating. After all since those mons have been practising with both silly and devastating things, they're at a point where they are focusing enough on the matter that suddenly growing an extra arm out of an ear is not going to seem too extraordinary by itself.
Ack, I forgot about the duel between Merlin and the one witch in
The Sword in the Stone. That is sort of the thing I was thinking of doing, but I wasn't completely sure if it would be better to have it just be more goofy transformations or something grotesque (arm out of ear, eyes on the belly, etc.).
Sorry I wasn't clear. This is kind of hard topic to describe since it's different from what I generally write.