I'm really hoping for that, so now I got to believe it isn't the case so I'm not super disappointed when it turns out that it's wrong and the game just lets you keep customizing your character because whatever, your character doesn't matter.
Also the no penalty is the worst part about that boss thing. I mean even the Mario games make it clear you used baby mode if you use the super powerup.
That if it actually played an ongoing role in the story is what worried me. This gives me cause for hope.