setting a players character to a custom character does not work?

In order to load a custom static character instead of each player's personal one, Take the character model that you'd like to use, in this case, "Dummy", rename it to "StarterCharacter", and then drop it into the folder known as StarterPlayer.

EDIT: If you want to load different characters, your best bet is to turn off CharacterAutoLoads of Players, and handle the loading yourself. So simply decide which model you'd like to use for the character (make sure it's named "StarterCharacter"), place the model in StarterPlayer, call :LoadCharacter on the player, and then take the StarterCharacter model back out. Repeat the process for whenever you load someone's character. (most often when they join or respawn)

So I made a compact old fashioned character morpher, fully commented for its easy understanding. Just add in 'playersToModifyIds' the userId of the users who will have their character changed and change the directory of 'characterModel' to the model of your custom character.

local playersToModifyIds = {3807724, 255752} -- UserId's of players to have their character appearance overwritten
local characterModel = game.Workspace.StarterCharacter -- Desired character model to change the player's into

game.Players.PlayerAdded:Connect(function(player)
    -- Check if player is to have its character changed
    for i, playerId in pairs(playersToModifyIds) do
        if playerId == player.UserId then
            -- Disable their default character appearance
            player.CanLoadCharacterAppearance = false

            -- On player spawn, change their character to that of characterModel
            player.CharacterAdded:Connect(function(character)
                -- Copy characterModel's accesories to player's character
                for i, part in pairs(characterModel:GetChildren()) do
                    if part:IsA("Accessory") or part:IsA("CharacterAppearance") then
                        local clone = part:Clone()
                        clone.Parent = character
                    end
                end
                -- Remove the player character's head shape and face
                for i, part in pairs(character.Head:GetChildren()) do
                    if part:IsA("DataModelMesh") or part:IsA("FaceInstance") then
                        part:Destroy()
                    end
                end
                -- Copy characterModel's head shape and face to player's character  
                for i, part in pairs(characterModel.Head:GetChildren()) do
                    if part:IsA("DataModelMesh") or part:IsA("FaceInstance") then
                        local clone = part:Clone()
                        clone.Parent = character.Head
                    end
                end
            end)
            break
        end
    end
end)