I definitely agree that the censorship system needs some reworking. I can see why having a censor would be good, but it suffers seriously from the Scunthorpe problem (the accidental censorship of benign words, seen in Viola, Spike, and the like) and is incredibly easy to circumvent. Any stricter system would ban even more perfectly reasonable names. To be honest, I don't see how any simple algorithm or banlist would be able to prevent people from naming their Pokémon something bad if they put their mind to it.
Thus, I feel that the censorship system should be removed. As much as I dislike naming Pokémon bad words, there's really no way to feasibly pull it off in a manner that is effective with minimal side effects.
On another note, I don't see the point of the Battle Test. It's supposed to test how well you battle, but really the algorithm it uses to determine that is less than stellar. It gives you no prizes for completing it, unlike the Battle Maison.