This pocket dimension effect where the physical mammon machine is destroyed but another one remains intact in a pocket dimension (inside the Black Omen?) could be a result of the Ocean Palace disaster. In the scene where the Mammon Machine goes haywire, it opens its own pocket dimension briefly, followed by Lavos' appearance in that same dimension.
Now, if we take into consideration that the Mammon Machine may have been operating by using the Frozen Flame, we essentially have the Frozen Flame opening a pocket dimension, dragging the Mammon Machine, or a projection of it, into the dimension with it. A link is established with Lavos, and Lavos comes onto the scene. Afterwards, the Black Omen forms, and the physical Mammon Machine is destroyed. What about the projection and the Frozen Flame? It very well could have been that the Frozen Flame resided inside of this projection of the Mammon Machine in the pocket dimension. If we look at the Mammon Machine as it is encountered inside the pocket dimension in the Black Omen, we find that it is blue instead of gold. This has always been interesting to me, and I feel there is some significance to it. The only conclusion I can make, however, is that the Frozen Flame is inside of this pocket dimension that it created, and it resides inside of this projection of the Mammon Machine.
Now, let's just assume for the moment that what I'm proposing is true. This has some implications, namely, the real reason for the Ocean Palace disaster, and just how the Frozen Flame is recovered in the future.
The Ocean Palace disaster now makes a little more sense if I think about it like this: Zeal was using the Frozen Flame to extract energy from Lavos. While Lavos may be getting drained of energy, it probably isn't the reason why Lavos controlled Queen Zeal and the Enlightened Ones. If you notice, it was Queen Zeal, who was under Lavos' control, who decided to move the Mammon Machine closer to Lavos. During the Ocean Palace disaster, Lavos makes its move to be reunited with the Frozen Flame. When Crono & co. arrived, they unknowingly thwarted the attempt. In both timelines, original and new, Lavos destroys Zeal. The reasoning here is most likely still the same - to prevent Zeal from developing further and becoming a real threat to Lavos. The reason the Black Omen appears in the new timeline is because Lavos' attempt to reunite with the Frozen Flame failed. So, instead the Black Omen is a place that houses the Frozen Flame. This makes sense and can explain the Omen's ability to transcend time.
When the Black Omen is destroyed, it appears to half fall into the sea and half fall into a gate of sorts. It's not really clear what happens other than that Crono&co. somehow either survive or are sent to Lavos. Either way, they encounter Lavos and the Omen is destroyed. If we assume that the Frozen Flame was inside this projection of the Mammon Machine, it could have lost enough energy to stop sustaining a pocket dimension and return to space-time, where it may have fallen into the sea with the Black Omen.
