Mmm that feels like a pretty big stretch. The whole point is that Fiona loves Shrek for who he is, not what he looks like. She didn't become an "ugly green person", because she was beautiful to Shrek and Shrek was beautiful to her.
Also, even if the idea was short=ugly (which I don't think it was, more just a king with a big ego and small stature), Shrek 2 is completely centered around Shrek feeling insecure next to what turns out to be a conventionally attractive bad guy.
Not all ugly people are bad, but bad people are definitely ugly (short being ugly, of course).
Well there’s only one bad person in Shrek 1, so that’s not really a good sample. If we move to the sequels there’s Charming who’s good looking but also an ass.
How bad do you have to be to be considered an all around bad person? How should we weight different kinds of bad (stealing candy from a kid, vs graffiti on an ol granny's shirt)? Is there an objective measure of badness and how to sum it?