All the weird crap that happens is all because it's trying to create encounters out your name in the grass data.
In the end, this all due to two facts. The water tiles right next to Cinnabar Island are "surfable grass" and the Old Man tutorial moves your name into the grass that doesn't change when you fly somewhere.
Yep. This leads to more stuff, actually: by changing your name you can actually determine the pokemon that spawn in surfable grass. In your name characters 3/5/7/9 determine the encounters, and characters 2/4/6/8/10 determine what level the encounter is. There's a list below: For example, if "A" is the third letter, you can encounter Golduck; if it's the 2nd letter of your name, the encounter will be level 128. By manipulating your name that you input at the beginning, you can actually trigger fixed encounters in the surfable grass, such as Snorlax, Mewtwo, and Glitched Trainer Battles.
A: 128 Golduck B: 129 Hypno C: 130 Golbat
D: 131 Mewtwo E: 132 Snorlax F: 133 Magikarp
G: 134 Missingno H: 135 Missingno I: 136 Muk
J: 137 Missingno K: 138 Kingler L: 139 Cloyster
M: 140 Missingno N: 141 Electrode O: 142 Clefable
P: 143 Weezing Q: 144 Persian R: 145 Marowak
S: 146 Missingno T: 147 Haunter U: 148 Abra
V: 149 Alakazam W: 150 Pidgeotto X: 151 Pidgeot
Y: 152 Starmie Z: 153 Bulbasaur (: 154 Venusaur
): 155 Tentacruel :: 156 Missingno ;: 157 Goldeen
[: 158 Seaking ]: 159 Missingno a: 160 Missingno
b: 161 Missingno c: 162 Missingno d: 163 Ponyta
e: 164 Rapidash f: 165 Rattata g: 166 Raticate
h: 167 Nidorino i: 168 Nidorina j: 169 Geodude
k: 170 Porygon l: 171 Aerodactyl m: 172 Missingno
n: 173 Magnemite o: 174 Missingno p: 175 Missingno
q: 176 Charmander r: 177 Squirtle s: 178 Charmeleon
t: 179 Wartortle u: 180 Charizard v: 181 Missingno
w: 182 Missingno* x: 183 Missingno* y: 184 Missingno*
z: 185 Oddish PK: 225 Rival #1 MN: 226 Prof. Oak
-: 227 Chief ?: 230 Rocket !: 231 CooltrainerM
.: 232 CooltrainerF Ml: 239 Blaine *: 241 Gentleman
/: 243 Rival #3 ,: 244 Lorelei Fm: 245 Channeler
As for the Kangaskhan thing - I've read that it was scrapped because the devs didn't have a good way to connect all four pokemon (Cubone, Marowak, Kangas, and 'M/missing link). A four-pokemon evolutionary path broke the tradition, continuous or branching, so 'M was just scrapped. The amount of glitches that 'M can cause are fascinating, though. (e.g. using "TM42" as a move, infinite pokemon cry, etc.)