To quote a post I made in an earlier thread:
Speaking of which, the first games, after handing you a Pokémon, then sent you off - and notice how people frequently named their characters after themselves, so there's personal identification here - then sent you off to a 'Pokémon graveyard,' and then having so extracted away the companions to leave you alone, as in a weird horror thing, throws in ghosts who can also not be fought - so that it's effectively saying that your Pokémon are now unable to move, in this place, and this is the area - before you are told to stop by a ghostly Marowak, and the player is supposed to just run wildly into these things. So, like, 'Hey, [your name], look at the dead Pokémon, now here are some ghosts all of a sudden, to meet you,' which I mean does seem a bit more than the later games, with their generally diluted adaptations of it.
In any case, while you find it slightly amusing that it now almost shares its name with a town with a Fairy-type gym, a misfortune I'm sure, it was also of interest how its tower structure had certain commonalities with later glitches found, such as 'Missingno,' such that all of the things that people found 'scary' or 'creepy' about these games was pretty much unified in one place. That said, a more interesting question would be what would happen if you removed Lavender Town from the games. Would it come across, then, as a jump-scare, or a bunch of 'scary' things added more or less at random which is supposed to be perturbing, or are there somehow fumes in the game which would produce it or the expectation of it, and hence make it come across as a logical continuation of the game which is nonetheless perhaps disturbing, frightening, interesting, etc., to various people?
ROM Hacks frequently go a bit overboard with Lavender Town, in terms of randomly adding graveyards and such, but this is generally regarded as simplistic. Lavender Town is generally identified as being about 'atmosphere,' and such, however it might be more accurate to say that it has two 'atmospheres,' a more 'Gothic' and empty, cold and unfeeling one, and a ghost-infested, active one, and the alternation of these is part of what throws players off (in which case you must ask how these multiple atmospheres can both exist in one place, namely 'Lavender Town' or the Tower). However, is it possible that the Pokémon games don't treat Lavender Town as simply a question of scaring the player or otherwise, but that the inclusion of a Pokémon graveyard and your exploration of it might also perturb the game, such that the interest in it might come across as in some ways unexpected? It does seem to throw most of the game's own properties and things that the game is trying to promote, such as battling, into some amount of disarray, and as such comes across as the game trying to scare itself, so to speak. In addition, ghosts do seem to frequently re-route Pokémon games into some sort of sandbox thing, with multiple paths and the need to go from place to place, etc., which also happens similarly in G/S as soon as they come up. At the same time, after this the rest of the progression frequently comes off as slightly tired, as with the Goldenrod City Team Rocket event, or the further gyms, etc., in R/B, so that you're basically just expected to be taking things straightforwardly from there, perhaps inadvertently, it would appear. It then becomes a question of how much so. Making the Pokémon world freely available like that, rather than linear, makes you wonder if when it returns to being linear, but still in this world, you aren't supposed to just carry on regardless of what shows up. Perhaps this says something quite decent for ghost Pokémon, but in any case.
As much as 'Lavender Town' and 'Lavender Tower' might sound like Spooky Pumpkin fare, you may wish to consider whether restating it as 'The Tower of Lavender,' might be of interest. In addition, you might wonder if by the game, which has so far been trying to take the player down with increasingly difficult Pokémon (at least potentially), suddenly opting to let up on trying to give the players issues at all - as part of the main progression - by making Pokémon unable to battle, isn't a bit of an interesting
departure. Anyway, that might be of interest.