I think it's strage that Lavos doesn't fight you with the 65,000,000 BC and Giga Gaia bosses when you fight it in the OP, since those beasts already came around and died...strange, isn't it? Maybe Lavos can choose whether or not to use those methods
That's what I was referring to earlier. What I said was, during the OP incident, he was awakened and he was probably very pissed off. They brought the Mammon Machine to the Ocean Palace b/c since they were in the ocean, probably close to the ocean floor, they were in a sense, closer to Lavos. Now, the Mammon Machine sucked power out of him and that's why they all had magical abilities. I guess when Schala raised its power, the energy surged, which is why we see her basically faint from exhaustion and because of the "wild energy." She couldn't handle it. And it might have surged further when they failed to destroy the Mammon Machine. This woke Lavos up. So like I said, he came out of his PD, kicked Crono & Co.'s ass in the ensuing battle, where we all know Crono dies after making one final attempt at Lavos. Then, in his rage, he comes up just long enough to destroy Zeal, then he retreats back underground.
Basically what I'm saying is, while he was powerful and very strong, it wasn't time to defeat him yet, so he didn't bother using his full power to fight you, probably because he didn't feel as threatened as he was pissed off. Hopefully, that makes my previous points a little clearer.