I am going to assume a few things as I can't remember exactly everything so if I get a few facts wrong help me out.
My theory. (In accordance with others, such as the pocket dimension.)
Lavos decends from the sky at 65,000,000 BC
Lavos buries deep within the earth. It was probably usuing a heat shield for entry that was disintegrated upon impact. No pocket dimension is made, Lavos has no control over the timeline at this point in time and only wishes to gather sustenance from the core of the planet while aquiring genetic information from the beings on the planet. It does this through a "Frozen Flame" which it detached in its descent. This gathers data about the beings it transforms and sends it back to lavos. Lavos "reproduces" asexually and instead of using wholly its own DNA it intends to use ours.
My assumption is that this is the true form of Lavos, whether or not he is a weapon or a normal evolution is not really what I'm trying to decipher. He has absolutely no control whatsoever over the flow of time, ever. It is never shown that lavos can control any part of time except when he has learned how to get himself out of the pocket dimension and is promptly confronted by the heros.
The frozen flame however may have caused the time crash, as it was the only part of lavos not destroyed and it was around to witness the efforts of Crono and friends. It could do nothing about this and it infact saw what happened to its counterpart when it was used by chronopolis. It could have used the power of the Counter-time experiment to crash time in a futile attempt to mess up the timeline in which lavos is defeated.
The frozen flame eventually manipulated the human genome into demi humans, magic users, and generally more intelligent beings. To the great unfortune of Lavos, these beings learned of its existence within the earth and began to siphon its energy through a creation called the Mammon Machine. The Mammon Machine being something unique to this world as it is made out of dreamstone which may be itself unique to a world that can dream.
The Mammon Machine was siphoning energy from Lavos at a low rate, taking less power than the sun stone. Until Queen Zeal moved it to the Ocean palace and turned the influx of power to its maximum Lavos probably thought it expended more energy to return to the surface, destroy its own work, and burrow deep again than to let the machine take a small amount of its power.
Once the Mammon Machine was fully active it was draining a signifigant amount of the power needed by Lavos to sustain itself and it needed to do something about it.
Lavos burrowed to the surface.
The entity used its powers for some reason. This maybe be the first time the entity used its powers if you think of the entity as outside the normal flow of time. It may have been awakened by the disruption and attempted to stop Lavos by drawing him into a separated dimension entirely. It could have been a direct attack on Lavos, an attempt to send him to he darkness beyond time. It failed, but managed a peice of him. Others were caught in the wake, and the Mammon Machine itself was severed, one in two places, whole in one, broken in another.
The Mammon Machine malfunctioned. (An extra conduit of dreamstone was added) Dreamstone may be a physical manifestaion of the entity's power.
The end result being a huge explosion in the 4th dimension that Lavos was forced into a pocket dimension, a situation totally new for it. Schala and a peice of lavos were "thrown" together at the furthest point in the timeline, the darkness beyond time. Gaspar was "thrown" to the end of time. Janus, Melchior, and Balthazar were "thrown" closer.
Since Lavos is still being sucked into the Pocket dimension created it unleashes its wrath upon Zeal.
The reason it emerges at 1999 is simply because it happened to figure out how to get out of the pocket dimension and that is where it ended up in the timeline. It doesn't know what could happen now that it escaped, so it destroys the planets surface and procedes end its experiement early and reproduce.
Every time you choose to fight Lavos you are drawn to seconds before he emerges in 1999. The Black Omen is a hodgepodge of timelines, drawing from the Mammon Machine that is whole within another dimension. The only real opening to Lavos dimension is in 1999, and the power supplied to the Black Omen is through the exremely convoluted Mammon machine in another dimension, which is the only thing still able to draw power from Lavos because of its situation. This power is accessed through the conduit of the ruined Mammon Machine since they are really both one and the same but divided.
Any questions or comments on how this fits in with everything since I couldn't address everything? I can add more specifics if questions arise, but this mostly about how lavos got in a pocket dimension and that was somone elses theory. I also hope I didn't steal too many peoples ideas as I didn't look around this forum to much.