That could work, but from the way I'm seeing it, the story only seems to be kicking in at the end of the game. I mean, yes; you do have an underlying plot that links to trying to achieve an objective (Rescuing Ash), but until the 8th Gym, from what you have descibed, basically nothing at all happens. Just think about the R/S/E storyline - Before you get into an epic battle with Kyogre/ Groudon, there is a multitude of objectives (Mt Chimney event, Team Magma/ Aqua Hideout etc.) that you must clear before you get to the battle - I can see no such events right now. I'd strongly advise you to lengthen out your story so that some larger aspects of it takes place during the game, rather than once you have all eight badges. It will keep the player intrested in the game and give a lot more depth to the storyline if completed correctly.
You'd think that Oak would be a bit more communication-savvy and be able to call up the Leaders and ask where Ash is, rather than wandering around a region for god-knows-how-long and then questioning them, rather than battling.
Far be it from me to question the desires of the oh so mighty legendaries, I'm not quite sure why they'd want to get rid of Ash and randomly infect him with evil. Regular Ash actually want to look after them, so in all likeliness, 'Evil Ash' would probably try to nuke them or something. Is it because he has captured them so many times over the years that they thought they would turn the tables against him?
Mewtwo (Or at least, Anime Mewtwo) isn't really seen to be the most 'light-hearted' of Pokemon. I'd be leaning more towards the the 'cute' legendaries (Mew, Celebi, Jirachi etc.) if I wanted a Pokemon like that.
By the way, how would one 'extract evil'? :P