The notion that GSC were meant to be the last games in the series is one I've never seen before, and is quite a shock to hear. The initial success of Pokémon was both explosive and infectious, and I find it hard to believe they'd cut the series down in its prime. On the other hand, I suppose it's better to go out on a high note than to stop at this point in time, when many would argue there have been too many Pokémon games already.
Whatever Game Freak's intent was when returning to Kanto, it doesn't really matter, I think, because the experiences players had because of it were what decided what the trip meant to them.
I think the concept was great, but they were a bit too ambitious; as a result, the execution failed in some respects. Of course, the return to Kanto is one of the reasons GSC is held in high regard, though I assume that's because the majority of those who played it when it was new were kids who weren't necessarily experts on game design. A child would be thrilled at the chance to go back to Kanto, and in color with better graphics; they wouldn't be paying attention to the way the overworld was butchered and neutered, nor how the music was cut up, or even the atrociously low levels.
HGSS fix all of this, though, but somehow... I still prefer GSC in some ways...!