Shipping internationally, first class is the way to go as long as the items you're sending aren't worth more than $100. I've never had a package lost and I ship to the U.K., France, Australia, Canada and Mexico frequently
As far as packing goes, I agree, go with a box that is under the size requirements, but still roomy. Wrap the custom in plenty of clear bubble wrap (so customs can see the pony without opening it), then surround her in packing peanuts on all sides. Also, make sure you reinforce the box with shipping tape (and make sure it's shipping tape, not "moving" or "packaging" tape which are intended to be easy to remove). I wrap tape around the middle 3 times both ways (horizontally and vertically) then usually tape up all the other seams, then ad two strips of reinforcement on each side. It's a lot of tape, but it makes me feel confident about the box being structurally sound. You never know when something might be dropped on it, or if it might be left in a puddle or that kind of thing!
The only time I've gone with a more expensive international shipping option is if the item(s) being shipped is/are worth more than I would want to shell out of pocket to replace. In this case, I bump up to Priority and make sure to get insurance and/or register the package.