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Didn't he go back to being the Champ once Trace lost to MC? I don't think MC wasn't to be champion like Red either.

I makes no sense for him to be E4 in the anime either, since Gary is Green/Blue and Ash is Red. Not to mention LGPE came out after HGSS and he was the original champion there.

Then bring back Yanmega and Carnivine as a reference to BDSP/LA

They could though. Just because they gave them to Giovanni, doesn't mean he kept them.

I don't know why their old Pokémon can't come back anyway. Seviper, Yanmega, Gourgeist, Woobat, Frillish, Mime Jr., Carnivine, Inkay, Yamask and Amoonguss are all with Team Rocket, so it makes sense they could be in the Prize Master too.