From what I heard, and possibly the most logical explination, is that it's all because of Jessibelle's fault. If you can recall that episode, Jessibelle in the past has always controlled James to do her bidding. In doing so, James has lost some, if not all, masculinity in him, therefore, he can dare to dress in female apparel.
It could be that Jessie lived in a town that's small, and therefore not visited by Ash and friends. Who knows?
And for the rest of those questions, I can't answer 'cause they don't have any difinitive answers. There's just not enough facts to even speculate on them...
Well, with the two recent episodes at hand, I have plenty of questions about Misty:
1. Why was she in Pallet Town?
2. Where'd the Azurill come from?
3. Why did she get a Spheal backpack? (notice it's not a cinch sack like her other ones in the past)
4. Why a Pokégear instead of a Pokénav with Match Call feature?
5. Her voice changed! WHY?!
I don't expect to get any answers for them, but I just wanted to throw them up in the air, anyways.