I hesistate to draw inspiration from real-life mythology. In fact, I don't like the fact that the important legendaries from the last three generations were derived from real-life myths, which is not to say religion. I had disliked Arceus until the Sinjoh Ruins revealed its conection to the Unown, since up till that point Arceus had reeked of a completely uninspired premise, whereas Unown is the anti-thesis to Arceus in that it is the most unique concept Game Freak have created.
It's not as if I don't the appeal in Abaddon or the Greek titans' story, but I want something far more immersive and profound that cannot be reduced to simple terms; Arceus' contribution to the story should be minimal compared to that of the Unown. I fully admit that I do not have a complete story laid out, and I believe the main reason Pokémon X was not released is that Game Freak didn't envision the entire story at the time, either.
I do think that Pokémon X would have introduced new evolutions, and not necessarily just the ones from Generation IV. There are still critters from the first two generations that are begging to evolve (the most obvious ones being Farfetch'd, Delibird and Corsola). However, there is nothing intriguing about those Luna Blaze screenshots in my opinion.
I disagree with you that the Sevii Islands would have been a better environment than Johto was. First, Johto was clearly designed in 1997 as evidenced by beta screenshots, and Kanto was probably always going to be included in Gold and Silver. That said, I agree that the Generation II Pokémon were deprived of their chance to shine, but Johto's proximity to Kanto isn't at fault for that. Game Freak could have easily reduced the number of Generation I Pokémon in Johto to around 50, which would have made revisiting Kanto all the more interesting. It was bad judgment on their part not to fix that problem in Crystal or HGSS.
The fact that the Generation II Pokémon were said to have recently appeared in the Sevii Islands has always made me wonder which Pokémon inhabited the islands previously. The Sevii Islands replaced Johto in FRLG, but had they been included in Pocket Monsters RPG and/or Pokémon X, I think they would have replaced Kanto if anything. I believe that the new Pokémon would have been assigned to new locations or at least old locations in previously unseen time periods. But I have to be honest: The region of the Sinjoh Ruins intrigues more than the Sevii Islands do, if only for the fact that we only saw a glimpse of that region.
I doubt that Game Freak would have given their concepts to HAL, and the similarities you noted are pretty superficial and are of the kind that almost always arises when comparing two monster-based games. Yamauchi's interview indicated that Nintendo were considering a different direction for the GBA that apparently did not even involve the Mobile Adapter, which was a fundamental part of Pokémon X. I don't know why Yamauchi thought that Pokémon might need to be replaced after its fad (he certainly changed his mind soon enough), but it's inconceivable that Game Freak would have supported that notion. For now, the closest game to Pokémon X is the Japanese Crystal.
Do you have other thoughts you'd like to share? I remember you posting about MindCrystal when Black and White were only vaguely announced in January 2010. What did you think HGSS were missing? Did you recently find out about Pokémon X from following my VMs?
I think the Unown created the Sevii Islands (how many of them there really are); I'm sure you've thought of that yourself or you wouldn't have brought the seven herbs, of which the Tanoby Ruins are an anagram in Japanese.
I don't think the festival itself means anything, as it isn't mentioned in the games. But the fact that the Tanoby Ruins were built around the same time as the Ruins of Alph is very intriguing. Did the Unown create the islands for the sole purpose of serving as another one of their warp points? It is also worth mentioning that Lugia and Ho-Oh used one of the islands (Navel Rock) as their habitat for some period after having left Johto (Lugia apparently took residence there, but Ho-Oh only flew by on occasion).
It's a shame that there are no references to the Sevii Islands in HGSS; I don't know what Game Freak were thinking when they made that call.