Do the words "Star Wars Special Edition" mean anything to you? Cause that is the kind of backlash that will be aimed at Game Freak if they did this. The vast majority of fans would be angry and it is possible some of us would stop buying the games.One thing that would help in Generation 7 is culling moves, and maybe even Pokemon, entirely.
Culling moves would be easy. Seriously, has anyone ever said "Yes" when Dragonite asks if it can learn Hyper Beam? Why have both Trick and Switcheroo when they do exactly the same damn thing? If a Poke transferred via Pokebank has an 'culled move' either delete it or replace it with an equivalent move. Good gods, imagine how much better it would be if Dragonite asked, "Hey, can I learn Extremespeed?" instead of a useless move that even seven year olds know is garbage.
Merging many (if not all) of the identical moves would be wonderful too IMHO. Stat boosting/lowering moves are some of the worst offenders here. Why have Leer, Screech, AND Tail Whip? Foresight and Odor Sleuth? Harden, Withdraw, and Defense Curl? Whirlwind and Roar? I'd personally replace some of the strictly worse with the strictly better, like Sing/Hypnosis, Sleep Powder/Spore, Selfdestruct/Explosion, but arguments could be made that would invalidate some pokes (isn't Spore like one of the few real reasons to use Breloom?)
The argument could also be made for those being flavorful names and keeping them, and I could agree with some such as like Milk Drink/Softboiled/Slack Off/Recover, or Moonlight/Synthesis, or Agility/Rock Polish (though really, why does Metragross learn both?) but seriously, do we need 3 moves for "Reduce defense one step" or "Raise defense one step"? It'd make programming the game easier and reduce the footprint of the whole thing.
Culling Pokemon would be... more difficult, but it would simplify competitive play and the Pokedex issue - seriously, WHY DO WE NEED a Pidove line and a Starly line when we've got a Pidgey line? Merge the three, and have the Pidgey line count towards 16-18, 396-398, and 519-521 (TBH I like the Starly line the most, but that's probably because I played Platinum first!) While Gen V is the worst in this regard, all the generations could do with a touch of culling - remove Cascoon and Dustox for example, and only have Wurmple-Silcoon-Beautifly with the latter two counting towards the now-culled slots.
The only problem is keeping the repeat designs that actually add distinction - and fan favorites, of course. I do like the difference between the Abra and Solosis lines - both psychic types who evolve via trade finally, but one is a frail speedster and the other is a bulky defender. Is there enough difference between Timburr and Machop's lines to justify keeping both? Spearow/Rufflet/Taillow? Tauros/Bouffalant? Ducklett/Wingull?
World explanation might be handwaved away that some species went extinct or merged with others - maybe have new designs that incorporate the elements of any merged lines (Pidgey with a Starly head and Pidove coloring, perhaps?)
I will admit though, while I don't think we should remove moves, it at least isn't as bad of an idea.
We do have a Dark-Psychic-Fighting trio of starters:I can't say "Don't design new Pokemon", because I'm still hoping for a Dark-Psychic-Fighting trio of starters, and there are certainly design spaces for new pocket monsters. Just... I want them to look at the ones they have first.
They may not be their primary types, but they still exist.
I think this question is partially why we have fewer new Pokémon in this Generation in comparison to Generations III-V. Scaling back is good since we are quickly approaching a thousand Pokémon total. What Game Freak needs to do if also scale back giving Pokémon alternate forms and special move tutors. I just have to agree about Mauville City having so many of these. This also applies to Mega Evolutions to an extent. In a year, we have gotten about 50 of them. Since we can only use one at a time, we simply don't need many more. I hope if/when there is Pokémon Z/X2/Y2, we don't add another 20 to the pile.