Yeah, I always knew the depth of the story of Gen I/II, it's just that it wasn't exactly communicated to such an extent.
I completely agree with this. Gen 1 (and gen 2 to a certain extent) had a very deep story that was left around in vague bits and pieces.
As for the story abluesman100 provided, it is pieced together very well; however, I have one disagreement with it.
It's the whole idea that Fuji and Team Rocket were working together at one point. I have never really been sold on this idea. Team Rocket did kidnap Fuji in Lavender Town, but I remember a grunt saying that it was because Fuji was trying to stop them from going into the Tower, not because of any past relation they may have had. And considering the grunts' levels of intelligence in those games, well...it's highly improbable that they were lying.
It's not that it's impossible for them to have been working together at one point--it's just that there's no proof to make that connection (forget the movie and manga and any other media for a second here; remember, the main series games are in a separate continuity from everything else ever).
Honestly, I'd say Fuji found Mew and the second Mew (Mewtwo) on his own, and in his attempt to research for the betterment of humanity, ended up going too far, thus creating Mewtwo.
Still, I agree with you. Gen 1 (and 2) had this unique charm in that its plot is there, and it's quite deep and thought-provoking, but it's also so vaguely hinted at that it's almost impossible to know exactly what happened.
In a way that makes sense, though; I'm sure Fuji doesn't want anyone to know exactly what happened. He probably wants to forget, and make sure no one else ever knows.