Shinies are like a trophy, most people just like to brag about having them, and if legit they are more likely to be less useful than a normal pokemon, why? because nature and IV, sure, gen 7 solved the IV problem (thought those bottlecaps are rare), but there is still a chance to catch the wrong nature one, which is never desirable in competitive (unless you are just having fun instead of going serious about it).
And thats one of the points, Im only talking about competitive online matchs, because thats probably the only time you would see a shiny being used by a trainer, in normal playthroughts, most people only have seen one shiny and thats the mandatory red gyarados in johto. Having a shiny in official is nice, you can bring them in online matchs to brag, and you mostly likely can carry this trophy all your life transfering it to the next gen.
Now with fangames, thats the thing, most fangames dont have online competitive, or transfers to another game for that matter, the only way to catch a shiny is, well, catching it, mostly likely the game wont have any way of online trading, so let alone considering masuda method, nothing can save you from this. Heck, people are even more likely to be shiny hunting post game, and a post game is something most fangames dont have.
So for me, boosting shiny rate making it rare but not extra rare like official (something like 1%), doesnt decrease a shiny value, its morely like it increases it, having the normal rate would probably mean that your players never get a shiny, but with it boosted they may encounter it in the wild while playing the story, they will get excited, they may even rework their team so they can use the shiny.
As for NPC using shinies I think is a neat thing if they are still rare (like one or two trainers having them) and the shiny rate is boosted, because it would be frustrating see NPC with shinies and one as the player having close to none probabilities of having one. Scripted shiny encounters depends on how the player likes the color palette, I dislike misdreavus shiny, so if there was a place where I could only encounter shiny misdreavus I would go like "meh", but with something I like I would be excited.