That.. was a Crystal Tools feature. I'll bet it was too much effort to transition into the v2.0 hybrid engine, but yeah it was one of the aspects of the original CT customisation that actually worked really well.
I can only assume the mesh warping we do see - acton sleeves and large gloves for instance - is pre-defined rather than intelligent like it used to be.
'Really sucks >.>
Also yeah Miqo'te tail accommodation in armours was wonderful, 's miserable we lost that and all. Given that was not (so far as I know) an intelligent feature, my bet's on their having done it to save on development costs down the line by not having to make race-custom versions of every armour.