I am pretty much doing that same thing but with a box collider + I lerp the collider size for smoother transition.
By moving through tiny gaps, I meant the mechanic where the player can go through the tiny gaps by strafing sideways. Capsule has a fixed radius so it won't matter if the player is facing straight or sideways.
I won't use such methods in my future games. It was just a unique scenario and I was doing a bit of experimentation with player movement. I have used character controller in my previous games, just this one is an exception.
Anyway thanks for the feedbacks and suggestion. I appreciate it.