Customiser colour picker and best practice for updating css

Sounds like you have a design problem in your theme. Users never like being bombarded with thousands of options which they might not even be sure when and where they are applied, so they can’t even test it. So the first question should be why is it that you are having so many options in the first place?

(side note, in a plugin I am collaborating on, we going to try and release a plugin to add the ability of having full styling abilities instead of cluttering the core plugin)

From the technical POV there is nothing bad in putting styling in the head, but if you are going to go that way, make sure you output it only on the pages that actually need it.