I never said I have a problem with it. It's just my personal preference for differentiating terminology that separates Gen III-V from VI-VII and Black from White, OR from AS, X from Y, etc. That term makes sense to me since typically, the term "dimension" is more so used for a different reality that still exists in the hyperplane (which is pretty much what versions are in Pokemon) while a different universe is more fitting for a separate timeline, the way I see it.The term "universe" is being used because of the "multiverse" theory so I don't know why you have a problem with it. The Pokemon multiverse split into:
Gen III - Gen V
Gen VI - Gen VII
And yes, you could consider Gen I-II to be it's own universe, but in my opinion it's irrelevant since it appears that unlike the Gen I-II universe, the Gen III-V and Gen VI-VII universe have many similarities and evidently have people from them passing through to the other one.
Within those you could call each independent version a timeline variation, the same can be said for RSE, DPPl, BW, etc. Although the most "relevant" of these timelines will always be those that include a third version. It's hardly a problem anymore since we haven't had a third version since Platinum, so you could say there's just two timelines now, I like to think of them as "Red" timelines and "Blue" timelines, so AS -> X -> Moon could be considered as one, OR -> Y -> Sun could be considered another, using the red-colored games together and the blue-colored games together. Of course, there's nothing to say these can't be mix-matched into their own timeline as well, it's just the simplest way of looking at it, in my opinion.
I actually do agree with you on that point of separate dimensions in Pokemon being linear rather than branched out with all versions being canonical (like, starting with Ruby, which could lead to either Diamond or Pearl, and each leading to Black or White, too complicated for my comfort). But my theory on how this would work here is how version exclusives are carried over from one gen to the next and to top it off, they don't get tangled in the process. For example, OR has the version exclusives, legendaries and non-legendaries, for Pearl, HG and Black while AS is the same with Diamond, SS and White. This even stays mostly consistent down the line as Black has the version-exclusives for HG, Pearl, FR and Ruby and vice-versa for White and etc. (The only exceptions I noticed were the Eon duo in HGSS and Throh/Sawk but in the latter's case it is more an issue of being common in one version and rare in the other.) Unless I'm mistaken, this could indicate a timeline continuum of versions that go FR/R/OR --> Pearl/HG --> Black --> B2/Y for one and LG/S/AS --> Diamond/SS --> White --> W2/X (which is consistent with your color version theory, huh). Idk, I feel that in some cases like Hoenn and Sinnoh, the version mascot of the opposite version was never referenced as a reality, kinda like it ceased to exist at some point (thus why Hoopa's rings only bought one legendary at the Eon spots). I won't bother including third versions in this timeline theory, don't want to complicate things even more.
As for the original-original universe of Gen I-II, I'm still confident that its newfound compatibility with Sun/Moon brings it back to the present canon. Idk, maybe we'll see an Easter egg in Sun/Moon with something like "We may have identified a third universe, one even more unknown/primitive than the one of the Fallers". As for Pokemon being Fallers, technically they were brought over PokeBank and not Ultra wormholes so they wouldn't be engulfed with the energy that comes from the wormholes.