Let's talk a bit about the ethics of Pokemon generated with external methods, and how this'll all work out with the changes made in the newest generation! Because you guys totally want to hear about this stuff and it definitely matters. Right? Right...? Of course!
Okay, let's start off by explaining what I mean by this. By external methods, I'm referring to tools such as PokeGen, which allow you to create a Pokemon entirely on your computer, completely EV trained, IV trained, etc. You can change every aspect of the Pokemon to your liking, even making it illegitimate (Squirtle with Pressure?). Back in Diamond and Pearl, PokeGen came into relatively wide use, which, in combination with Nintendo's new WiFi battles, changed how competitive battling worked forever. The program was then updated and used all the way until Black 2/White 2, and an X/Y version is currently being worked on. The program itself took the effort out of finding a Pokemon that just happened to have everything you needed, which could take days upon days. Therefore, the program was used by a gigantic majority of competitive battlers, because it took mere minutes to make an entire team! Now that the explanation is out of the way, let's delve a bit deeper.
Is it ethical to use these Pokemon in different situations? Well, let's assume that they were all made completely legitimately. After that is put into consideration, it depends entirely on the situation. To start off, let's say you're using it in-game or for battles against a friend. In-game, sure, it's fine. But you're kind of ruining the game for yourself. That's your choice though, I suppose. I'd say that it's also fine against a friend, but you should at the very least tell them how you obtained your Pokemon. Ethics preserved. Goodie!
Now, let's say you're using them in online play or Random Matchup, a feature introduced in Black/White that allows you to battle random people from around the world. As for online play, which is against people on, say, a forum, I'd say it's still fine, under the condition that you, once again, notify your foe about your method of obtaining your Pokemon. Chances are they obtained it the same way, anyhow, if they're a competitive battler. As for Random Matchup, I'd have to go ahead and stop you there. Using them in Random Matchup provides you with a rather unfair advantage, considering you're challenging a random person who probably isn't hacking to get their Pokemon. The entire point of Random Matchup is to ladder, which makes it even worse.
Finally, official Nintendo tournaments. I would avoid using a generated Pokemon in one of those, for sure. Their rules specifically state that hacked Pokemon will result in a suspension from the tournament (and future tournaments, I think?), meaning that they will attempt to check, and they do mean business. I mean, you could try, and possibly succeed, but it's in your better interest to not do that.
Now that that's out of the way, let's go to a slightly different subject; competitive battling in Pokemon X/Y. Nintendo introduced a lot of changes to training and breeding this generation, most likely as an attempt to deter people from trying to generate their Pokemon. These changes include the EXP Share sharing the earned EVs with all Pokemon in your party, Super Training, and the fact that, when breeding, the parent holding a Destiny Knot can pass down five of their IVs. This makes hatching "perfect" Pokemon much, much easier, and definitely encourages players to just make their own team in-game and see how it works out. It feels a lot more rewarding and less tiresome now, especially since you can create an ideal team this way in mere hours, instead of days, like previous generations. Due to these massive changes, I'm willing to bet that the use of Pokemon generators like PokeGen will fall significantly, or, at the very least, the playing field between the person generating Pokemon and the person training them will be evened out significantly.
I definitely applaud Nintendo on these changes, though. With these kinds of methods to train your Pokemon, it makes the whole process feel a lot more rewarding, doesn't it?