There are lots of creative uses for ready-made stencils. They're great for small motor control and have a wonderful instant-gratification quality. They can repeat them, and make images that look like a slinky (circles overlapping) and make patterns or compose scenes. I also gave the sixth, seventh and eighth grades circles (lids) and rulers recently and they made gorgeous designs that have very interesting op-art qualities.
I think that not allowing them the fun of stencils from time to time would be a bit like (to broaden the likeness) not allowing ice skates, fabric patterns, recipe books, fonts on the computer (they would have to make their own letter styles- always), router bits, biscuit mix and so on. And for that matter how about rubber stamps, wall paper or ANYTHING ready-made? If we had the make-your-own rule about everything we would have to build our own cars, clothes, distill our own oil .... okay so I'm exaggerating to make a point.
Did you ever see the video Graffiti Verite? One of the artists talks about the tradition of using stencils.
Nobody seems to mind crayon rubbings of leaves (they're ready-made).
A moral issue? No more so than ready-made paints, papers, brushes, chairs and tables that we allow them to use for their work. There's a neat Dover book about making your own artist's tools that really does discuss it all as a moral/ethical issue. I'm glad in many ways that Michael's craft superstores exist but I often feel sad about our culture's level of manual incompetence.