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Sadly, you never do see it's evolved form. So yes, I do believe that's right. Been a long time though, but the last time you fight them their started still has not evolved.
you can fight wally as many times as u want...once you beat the elite for he will show up in the cave south of the pokemon league where you fought him last time to get to the pokemon league. (good practice)
Yes battling Wally is very good practice as his Pok?mon gain 3 levels every time you battle him. Except at a certain point his Pok?mon never get stronger.