I can't say I think the premise is good, a Kanto celebration without Starmie, Nidoking, or the Zubat line just seems wrong (maybe add Ruby/Sapphire to the colour theming?). In any case, here's an infodump:
0. Format
I'd personally never settle for anything other than 6v6, but you might be able to convince laypeople to go with Battle Spot teams (3 for singles, 4 for doubles). My understanding is that the match timer is unforgiving for 6v6 singles, but it's absolutely the thematic choice for a nostalgia setup (remember: doubles didn't even exist until gen 3). Disallowing duplicate mons is standard everywhere I've seen, and you could go either way on duplicate held items. The most common 6v6 formats allow them, but for me personally that kind of feels like a holdover from when there were a lot fewer good items.
1. Mon restrictions
Current tiering is unlikely to be perfect since metagames are often shaped by non-gen 1 mons, but it's the best available source of information for relative strength within a 6v6 environment. Here's the current standing of each relevant mon for singles (including cross-gen evolutions and additional forms):
- Ubers: Mewtwo, Annihilape
- OU: Dragonite, Moltres, Zapdos, Clefable, Slowking-Galar
- UUBL: Moltres-Galar
- UU: Arcanine-Hisui, Blissey, Slowking, Scizor
- RUBL: Blastoise
- RU: Chansey, Gengar, Gyarados, Mew, Slowbro, Weezing-Galar, Zapdos-Galar, Umbreon, Politoed, Magnezone, Rhyperior
- NUBL: Porygon-Z, Cloyster
- NU: Muk-Alola, Ninetales-Alola, Porygon2, Sylveon, Tentacruel, Vaporeon, Vileplume, Tauros-Paldea-Aqua, Ninetales-Alola, Scyther
- PUBL:
- PU: Venusaur, Sandslash-Alola, Arcanine, Hitmonlee, Rhydon, Slowbro-Galar, Tauros-Paldea-Blaze, Espeon, Articuno-Galar
- ZUBL: Venomoth, Electrode-Hisui, Kingdra
- ZU#: Charizard, Arbok, Raichu, Pikachu, Raichu-Alola, Sandslash, Ninetales, Wigglytuff, Bellossom, Dugtrio*, Dugtrio-Alola, Persian, Persian-Alola, Golduck, Primape, Poliwrath, Victreebel, Golem, Golem-Alola, Magneton, Dodrio, Dewgong, Muk, Hypno, Electrode, Exeggutor, Exeggutor-Alola, Hitmonchan, Hitmontop, Weezing, Electivire, Magmortar, Tauros, Tauros-Paldea-Combat, Lapras, Ditto, Jolteon, Flareon, Leafeon, Glaceon, Snorlax, Articuno
Not in SV: Venusaur-Mega, Charizard-Mega-X, Charizard-Mega-Y, Blastoise-Mega Butterfree, Beedrill, Beedrill-Mega, Pidgeot, Pidgeot-Mega, Raticate, Raticate-Alola, Fearow, Nidoqueen, Nidoking, Crobat, Parasect, Alakazam, Alakazam-Mega, Machamp, Rapidash, Rapidash-Galar, Farfetch'd, Sirfetch'd, Steelix, Steelix-Mega, Kingler, Marowak, Marowak-Alola, Lickilicky, Tangrowth, Kangaskhan, Kangaskhan-Mega, Slowbro-Mega, Seaking, Starmie, Mr. Mime, Mr. Rime, Scizor-Mega, Jynx, Pinsir, Pinsir-Mega, Gyarados-Mega, Omastar, Kabutops, Aerodactyl, Aerodactyl-Mega, Mewtwo-Mega-X, Mewtwo-Mega-Y, Gengar-Mega
#Since ZU is the lowest tracked tier, I wouldn't consider it internally balanced.
2. Fairness and Availability
Under normal circumstances I'm in favour of more options, but because the listing is already very restricted I'd try to avoid having the top slot taken up by something that requires transfer from another game (DLC for SV itself is probably fine?).
As such, I recommend also restricting the following mons/forms:
- Mewtwo, Mew, Weezing-Galar, Articuno-Galar, Zapdos-Galar, Moltres-Galar.
Note that this solution does not eliminate possible sources of unfairness because it may be easier to obtain optimal stats for an existing mon by using other games, the only way to fully remove that would be to provide a very fast way to generate optimal mons.
3. Other restrictions
Few items are banned for power reasons, so I wouldn't start with much there (if weather teams end up too strong, consider removing the heat/damp/icy/smooth rocks).
As part of a dislike for luck-based strategies, mechanics that increase evasion are often banned in community-managed competitive environments. These can include moves (double team, minimize, acupressure), items (brightPowder, Lax inscence), and Abilities (Snow Cloak/Sand Veil, Moody). Lowering the opponent's accuracy stat is generally considered fine since it can be removed by switching out.
Abilities that passively prevent switching are extremely strong in single battle environments (trapping moves are much less oppressive because they require a turn to activate for each target). I don't think there's a way to access Shadow Tag with this pool of mons, but Arena Trap probably deserves action. It may be simpler to just ban Dugtrio rather than forcing it into its hidden ability (since you may want to restrict both Sand Veil and Arena Trap).