I like this theory, it's interesting and raises some good points. But if I may add my own take?
I personally think that Mew and Ditto CAN breed. The whole egg group system is made for game mechanics, and is too silly to translate completely when moving into a story medium. And personally, I've been wondering about Mew and how it originated Pokemon recently, among a lot of other things.
They say that Mew "contains the DNA of every Pokemon in existence" in its genome. If you read that sentence literally, then you would think it had the complete genome for every species that ever existed. To me, that's a bit of a stretch. There's a more reasonable and interesting way to look at it. A creature's complete genome, all the DNA is possesses, is like a giant cellular library at the center of the nucleus, one where books are never, ever allowed to leave, and which are only copied for use. Every chromosome is made of DNA and packed tightly, so each one is a row or section filled with books full of the blueprints for everything the body needs, from growth patterns, bone shape, proteins, etc.
In Mew's case, I find it hard to believe that it would keep the blueprints for building a complete living Pikachu in the library, especially if Pikachu did not exist yet. It is better to think the shape and characteristics of individual Pokemon species came about from their environments, like real world evolution (with a lowercase e, while I will refer to Pokemon Evolution with a capital). After all, Evolution has to be driven by the environment like evolution. A Pokemon often radically changes the size and layout of its body when it Evolves. Why go through the extreme effort to program in and go through that type of change for no apparent reason other than, "I'm bored", or "It's Thursday"? The changes in Evolution must be for advantages, like how Professor Woodwind explained WHY Slowpoke evolves into Slowbro, and why Shelder gives up becoming a Cloister to help Slowpoke.
I think what Mew had was the DNA that made every future Pokemon unique as a species, what genetically identifies them as Pokemon rather than, say, normal animals and plants or humans. Also, the reason it knows every move is because it had the DNA of every type. So it had a chromosome section filled with how to manipulate fire, how to manipulate electricity, how to create vines, how to blast water, how to fight, so on and so forth.
As far as Mew's Transform ability, it would have been rather useless at the start. Transform allows you to become another creature, sure, but Mew was the only one, so what good was Transform other than being able to turn into trees and rocks? But nonetheless, it had the capacity to do so. I think that Mew bred into a sizable population, and over time, perhaps groups of Mew began to focus on particular abilities, as the expense of others.
What I mean is, these groups started developing the skills characteristic of the various types. So one group started playing around with and improving their ability to manipulate fire, and so on. The other powers were neglected, and over time, were weeded out, so from each group came the ancestors of every Pokemon type. This is one way how Mew could have originated all Pokemon.
Now when it comes to Ditto, I still think Mew originated it. But looking at Ditto alone, without thinking of Mew, it occurred to me that perhaps, like someone earlier suggested, that Ditto's body was more of a POSITIVE adaptation.
Ditto has a blob-like, formless, flexible body. And the only thing it can do is temporarily become other creatures and objects. It is a shapeshifter. The change is temporary, and dependent on concentration to an extent, since they said that if a Ditto laughs, it changes back. So like someone else said, it's like tensing a muscle. The same analogy was used by the character Clayface in Batman the animated series, who was also a misshapen man able to change shape.
Ditto's soft, flexible body would seem like it would only facilitate the ability to change shape. It would certainly be easier to do that if you are flexible rather than trying it when you have a rigid bone and organ structure. It would almost seem like a necessity.
And yet, as you pointed out, Mew knows Transform, and uses it with ease. And Mew originated all Pokemon. So perhaps Ditto originated from it's own group of Mew. Going on the idea that groups of Mew broke off into various types and created ancestor species, you could say that this would have been the best time for Mew to use Transform. At that point, it could at least turn into other creatures besides trees and rocks. And from what I have read, Mew is able to transform perfectly, without the need of a soft body.
I think your theory is good, but perhaps it's not so much that Mew lost it's original form, as much as it lost the ability to Transform with that shape. Mew can transform perfectly, and yet Ditto's soft shape clearly seems to be something it would develop to help it transform. But Mew is very powerful. So perhaps the Mew that eventually became Ditto had a problem. Not all the Mew could potentially be perfect, so maybe one group of Mew had a genetic defect in the genes controlling their Transform powers, one that messed up their ability to change easily despite the rigid bones. So in order to use transform properly, those Mew had to adapt, had to get rid of their solid shape and take on the flexible form of Ditto. Genetic flaws are possible in Pokemon. After all, you could chalk up Mini-Dit's inability to make life size copies a flaw in the genes that allow Ditto to alter it's size.
I think this could be very true and that Morimoto had the story all along it is known how he didn't even tell Nintendo how he added mew to the game until after it launched or a week before or something.
I don't think they are De-evolved mew i believe mew is a unique pokemon a true legendary that made all the other pokemon.
I like how ditto appear around were mew two was made in gen 3 remakes and could very well be failed clones by team rocket scientists.
Same weight and move transform and color in normal and shiny.
Ditto cant use pound because its a blob it has no limbs it cant do anything without transforming into a pokemon first.
The reason mew can not breed is because its a legendary and game mechanics stop it from doing so.
>>>>>>>>>>my 3DS Friend Code : 3007-8122-0355<<<<<<<<<
Sooooope. Might have had this little theory get a shout out in X and Y...
It's probably just a little fandom nod, but I'm interested by the fact that they only turn up there (and the Friend Safari with a Normal Friend Code) in the game.
Anyone wanna talk about this or...