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Paradox Pokemon are Imaginary creatures created by some Lovecraftian dream monster

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Scarlet's entries all mention that Violet's paradox mons originate from scifi-cryptid magazines. Arven's postgame quest let's you read the scarlet book. It has some backstory of the original expedition into the madrid crater area. The author had some dream were he had something wisper to him, the picture of the page looks like a schematic for the "time machine" you see in the endgame. Another page has a picture of the possible third legendary which looks like a lizard on a diamond, according to the holey text it's a disk like pokemon.

The professor's diaries in the observatory that the pokemon on the bottom of the crater is the source of the tera crystallization. If you do the History classes in the academy you find out that the scarlet book was deemed hogwash by the general public and nowadays is only found in esoteric shops (the expedition as 200 years ago) the whole expedition was probably just some money laundry and the paradox mons where made up to justify extra founding from the academy (there is a page in the scarlet book which heavily emphasizes this) . The prof found the schematics to the machine ten years prior to the story, made another expedition down the crater, discovered how to make tera crytalization possible outside of the crater by making the tera orbs out of the crytals found there, used the money from this to build the machine from the book, when the machine began to spew out the Paradox pokemon they wrongly concluded that they were real after all and from the past/future when in reality they were probably some sort of tulpa created by the wish granting pokemon.

This makes perfect sense considering that the crater area is a paradise full of pseudo-legendaries, white flabebe's and there are items every two steps on the ground, the whole thing is a honey trap to lure in people towards the sleeping pokemon. In short, it's some lovecraftian story about a sleeping god.