Personally when I used to play MUGEN as a teen, I'd fight at least 10 matches against the computer and 10 with my friends to see if the character was too OP. If I got all 20 out of 20, it would be black listed and unusable in tournaments between us, but we also allowed certain OP characters for what ever reason. It was really vague, but coming up with your own rules for what is too OP would be a good rule of thumb.