I'd say option one. Since some characters aren't from any "Earth", like FF characters, Ash, Link, etc. Sometimes their language doesn't have a name, in case of Ash, and Hylian would be weird for everyone but Link. The Pokemon regions are supposed to be in Japan, Earth, (Even Arcanine is a Chinese Pokemon, Xatu is South American, and Lt. Surge is from the U.S.) Option one would smooth out the game.


Pokemon is a mysterious world full of Psychic and Ancient powers. I mean if a society can create Warp Panels and Shrink machines inside a shrinking Pokeball and a genetically enhanced reproduction of an ancient Pokemon (Mewtwo)... Then whatever machine brought them here could have another machine that "corrects" language barrier.