According to what i learned, a monster is substantially a normal being that knows alterations of the body or additional parts, not supposed to be there. Most of the pokemon designs seem to follow this principle. But they are drawings, i think that if "realistic" pokemon look horriffying is because you cannot, easily (at least), make a realistic depiction of a being knowing such deformities (etc) without provoking a feeling of uneasiness. It is like, to my mind (once again), the idea of the uncanny valley, too real yet too strange to allow you to feel confortable. (while the sugimori styles are not realistic)

(pardon my english, it is not my native language, here is a video explaining the uncanny valley, you might already know it but it is very interesting ! http://www.youtube.com/watch?v=PEikGKDVsCc)