Is it advisable to dress in costume for a musical theater audition?

No, this is usually not advisable. It is often considered "too much" or the sign of an inexperienced actor to come to the call in full costume. It is recommended that an auditioner dress for confidence, and for comfort and movement (especially if there will be a dance call), However, it is always good advice to keep the appearance, style and personality of the character you are most interested in top of mind when choosing how to present yourself at an audition.