Ya, people have done them Do a search of 'Customs and Artwork' on the forum for "TE babies" or "Twinkle customs" there should be some queries that come up
baby lofty did a TE gingerbread and TTT (the latter of which i bought ) but i'm sure there are lots more. i know mimic's been done at least a couple times, and quackers, and i'm pretty sure speedy has too. probably all the original TEs have been done at some point or another.
I did some G1 baby twinkle eyes, I made them from BBE babies!! they are on my photobucket account under customs if you want to take a peek. (account name is bagginslover)
I did a TE Sweet stuff back in fall 2003 from a first ed. rainbow dash I'll see if I can get a new pic of her since all my pics are stuck on my old computer at the moment