The Lugia/scrapped Pokemon theory is similar to the "PokeGod" theory, that they are second generation Pokemon but both are untrue.
MissonNo., M, LM4 and all other glitch Pokemon are legitimately just that, glitches, similar to the Mew glitch except using a hexadecimal that didn't exist in the first generation. Their, appearances, movesets and evolutions are a jumbled mess of existing Pokemon data.
Also consider the fact that glitch Pokemon are harmful to your game. My best friend once told me that another friend of hers lost his Charizard when he captured MissingNo, it just vanished. I've heard that it can also prevent link cable battles and kill your save battery.