Its a limitation and isn't something that will/can be fixed.
It's because for custom names to work, the
Manage Contacts --> View Conacts By
Has to be set by email address, as that is a constant that doesn't change, unlike the display name. Then Plus! changes the email to the custom name you have set. But as Messenger thinks it is actually showing the email address, it doesn't parse for emoticons.
So basically you either have normal display names with emoticons in, or custom names but without emoticons in.
/ 
