Little Big Horn was a decisive defeat, but I really don't think it should be considered the worst. First, the number of men killed wasn't that great, only around 260. This looks less severe when coupled with the fact they were outnumbered 4 or 5 to one by a force with equal, in some cases superior, firepower. It would have been one of the greatest victories against the odds in US military history if Custer had won. If casualties suffered due to poor planning are the judging guidelines, than the battle at Cisterna during the Anzio campaign was far worse than the Little Big Horn. At Cisterna, the 1st Ranger Battalion was sent to lead an attack against what was supposed to be a thinly held portion of the German front. Instead, they found the staging area for three panzer and panzer grenadier divisions. Outnumbered and trapped in a canal which had been their main avenue of attack, the 1st Ranger Battalion fought for several hours before being overwhelmed by vastly superior numbers. Out of approximately 770 Rangers, only 6 made it back to Allied lines. The rest were either killed or captured.
As to Custer's decision to attack, he had done something similar before and believed he could do so again. In 1868 he attacked and defeated a much larger band of Natives at the Washita River. Granted, he attacked a mostly non-hostile band who had mistakenly been deemed a dangerous force, but they fought back and Custer beat them. He thought that he would have surprise on his side once again, but Reno squandered the opportunity by dismounting his troopers and attacking in a skirmish line instead of charging into the camp and trying to cause confusion and disorder among the ranks of the hostiles. Who knows what would have happened if Custer's plan had been executed properly. Stranger and more unexpected victories have been won on the battlefields of the world.