The category should reflect the prize and vice versa.
Exactly. I will only comment on the custom minifig category, for obvious reasons -
I see any minifig made from official pieces as minifig MOCs(a term that gets used incorrectly too many times), not as a custom. Anyone can mix and match official parts to get different minifig combinations, but to truly customize...you need to actually create something from nothing, using other parts and/or materials.
Take a look at my castle minifig customs for reference. Not to say that mine are the end of all customs, but they will give you a good idea to what I believe this category is all about. Fabric, decals, paint, special parts, etc. are what constitute a true custom (imo).
Having said that - you don't need to do anything to the degree/level that I do (as an example), but you can certainly take a "stab" at it!