Favorite fanfic? Urgh, that’s tough. Of the fanfics I’ve read completely, the ones that come to mind right now are:
“It’s A Dangerous Business Going Out Your Door” (Lord of the Rings-style adventure epic)
“My Little Denarians” (a dimension hopping crossover with The Dresden Files. Starts comedic, gets pretty dramatic and thrilling),
“Fluttershy’s Bad Hare Day” (Fluttershy is turned into a rabbit, and must find a cure before the transformation becomes permanent. Also, Angel is head of the Rabbit Mafia),
“Authored For Adoration” (Short and sweet RariJack fic where Rarity, while trying to write a romance starring her and a certain farmpony, is sorta dragged into helping Rainbow, Twilight, Fluttershy, and Pinkie each write their romance stories for Hearts and Hooves Day)
“Princess Celestia Hates Tea” and its sorta-sequel “A Short Story By Twilight Sparkle”
“Shipping Sickness” (Twilight brings furniture to life and forces them into relationships. It’s as insane as it sounds.)
“Derplicity” (Derpy is secretly a Changeling. Nopony notices or cares.)
Hell, almost anything from Skywriter!
Now for the worst fics I’ve read: Personally, I hate those stories who feel they HAVE to be extra-grimdark and gory, just to give the middle finger to the generally cheerful universe of My Little Pony. Why would ANYBODY want to read about the characters we know and love being broken (both physically and mentally) and raped (again, both physically and mentally)?