Interestingly enough, I had an idea similar to this, but not identical.
Essentially, it would be like the handheld pokemon games, but fleshed out and massively expanded. The player would have a much wider range of choices for customizing their trainer, including outfit, age (to a limited extent- probably a range inbetween 10 and 17), and 'personality,' which would affect how NPCs in the game reacted to you and vice-versa. All the regions introducued thus far, at least in the 'regular' games could be journeyed to and explored. There would be many more choices for interaction with pokemon then simply battles and contests, such as areas where you can simply talk to or camp out with your pokemon. You'd still have the goal of winning each regions pokemon league, which would probably unlock some sort of Ultra-Mega-Super League at the end of the game, but you would also be able to, with patience and hard work, actually catch EVERY SINGLE TYPE OF POKEMON. You would be able to connect to the DS games and transfer and trade pokemon, of course. Essentially, it's what you would do if you went by the basic formula of pokemon, put it an actual three-dimensional space, and then leveled the whole thing up beyond the simple options of the DS games.
Pokemon, at least in my mind, doesn't really fit as an Action-RPG. It would be absolutely fine for a spinoff game to play with the subject, but quite a bit of the fun of the current games is derived from one relying more on strategy and less on reflexes.
I like the idea of progressively increasing the strength of wild pokemon and trainers as your own team levels up, or even adjusting the level so you can train teams of low-level pokemon pretty much anywhere. It would be a nice step forward in non-linearity.