I think we're all overanalyzing this. Here's what i think happened:
After Arceus created Dialga and Palikia to be the gods of time and space, Arceus needed a god to help breath life into the universe, so he created Giratina to be the god of Life. Giratina, being the evil, corrupted ghost/dragon we all know and love, refused to be in charge of creating life, so he tried to rebel against Arceus in anger.
So of course, Arceus wiped the floor with him.
But Arceus still had mercy for Giratina, so instead of destroying Giratina, he simply stripped him of his title, and banished him into a different dimension(Remember that psychadelic graveyard in D/P? This also explains why he's refered to as the "renagade" pokemon). Arceus realized that his error was that he gave the title of life-bringer to a pokemon that was easily corrupted by the darkness.
So Arceus decided to create a pokemon that was inherently innocent, one that was too good natured to try and use it's power for evil, and thus, Mew was created. Arceus considered that this pokemon was the most ideal of all his creations, so he started to model command Mew to model other creatures from it's DNA. So the other legendaries,(Groudon, Rayquaza, Kyogre, Shaymin...etc.) were made to form and shape the earth. Finally Mew gave birth to other pokemon, (the non-legendaries) to inhabit the earth. Since they were all made from it's DNA, it can also transform into them.(sure it can transfrom into Arceus in the game, but thats just a plot hole in the game's programming)
Some of you would ask, "Why didn't Arceus create life on earth himself?" Well, he could've made time and space himself, but he made Dialga and Palkia to do that themselves. So why not have another one create life?
This is just a theory of mine, but it's makes more sense than some crazy time paradox, right?