A lot of weird shit happened after Spaceworld 1997. Reminder that>December 1997 was when the Porygon episode aired and anime went on a 4-month hiatus>The last major TCG expansion was November 1997's Team Rocket, the next one, Leader Stadium, being released in October of next year>The Pokemon Company founded in April 1998>Pokemon 2 are scrapped and started from the beginning, thus setting the stage for Pokemon Gold and Silver as we know it
The plan circa the end of 1997 was to have Pokemon 2 released in October/November 1998, the same time the anime was supposed to end its first series. The marketing campaign for the second set of Pokemon would start then, with TCG, a new anime series, manga. Ever noticed how Mew flies away towards Mt. Silver at the end of the first movie? Yeah, that was a teaser.
Pokemon Shock controversy pretty much put an end to these plans. With media pressure on all things Pokemon, the games development became much more stressed which probably caused Satoshi Tajiri to step down around this time and let Masuda take reins as the new director. This also marked the change in attitude, and the new games were no longer supposed to end the series, thus they set up TPC to better manage the new long-lasting IP.