Upon organizing my Pokemon movies chronologically I became confused as to where this movie lies. There was more evidence such as Misty's and Brock's presence as well as Totodile (Johto water starter) and Xatu/Natu (Pokemon introduced in Gen II as well) and thus I concluded the movie was more 'Johto' in the sense. So then why do Latias and Latios, the Eon duo of the 'Hoenn' region, make an appearnce? This feels like a vital chronological flaw and it's messing with my current knowledge of the Pokémon anime.
In the Pokemon movie series, there's been always a group of films by the order of the Pokemon anime series, which will go by that - Original Series (Indigo, Orange and Johto League), Advance, Diamond and Pearl and so on by the anime series have a number of films for each season, so the original series goes by 5 seasons, so it has 5 films, and so on. the usual thing of the OLM studio in the last films upon a pokemon season film is to feature pokemon from the next Gen. (with few exceptions), by this list here:
Original series films
Orange season - "Pokémon: The Movie 2000 - The Power of One", features Lugia which is a 2nd gen legendary pokemon. (while the anime season is still about the 1st gen)
Johto season - "Pokémon Heroes: Latios and Latias" feature Latios and Latia from the 3rd gen.
Advanced Generation films
"Lucario and the Mystery of Mew" and "Pokémon Ranger and the Temple of the Sea" featuring 4rd gen pokemon: Lucario and Menaphy
Diamond & Pearl films
"Zoroark—Master of Illusions" - featuring Zoroark and Zorua from the 5th gen.
You also might want to see this post: When do the Pokemon Movies occur chronologically to the plot?
PS. in the movie you mentioned, there's also a racer with a Wailmer, which is to from the 3rd gen, but it has nothing to do with the answer just a side note.