The central issues here are whether or not Madara should be upgraded to Moon level based on Hagoromo's statement and whether or not Kaguya should be upgraded, are they not? If we upgrade Madara, the main characters should logically follow, shouldn't they, since they fought and defeated him?
That said, I agree with upgrading Madara. I presume Hagoromo is one of those characters who is supposed to be an extremely powerful and wise figure central to the lore of the verse, yes? If that's the case, especially in the absence of outright contradicting circumstances, there is no reason to disregard his words. Frankly, Illuminati's "feats > all" logic I find is completely ignorant of the extremely common use of characters like Hagoromo as exposition devices. Basically, Madara, by his words, was nearly as strong as he was, and from what I could gather, got more upgrades later on, which would seem to point to him at least being an equal to Hagoromo by the end of his run.
As for Kaguya...