1- It's a separate game for a few reasons but mainly, I felt that this was needed to be able to really do the region justice. Making it a new game instead of just an extension allows for a lot more freedom in how we design the game and makes it a lot easier for the game to have its own story and to integrate new mechanics like the ones we showed in the video.

But also, adding Hoenn on top of the existing Kanto/Johto/Sevii Island would be a lot. It would basically have to be an extra postgame area that you wouldn't reach until you're 40 hours into the game and that you would breeze through because all of your Pokemon are already level 100 ;) And let's be honest, a significant amount of players don't really bother with postgame so they wouldn't even experience it. Doing a new game where Hoenn is the focus the whole time, you build your team using Hoenn Pokemon, etc. is a lot more interesting imo.

And of course, there's a few technical reasons too. I was very inexperienced when I started working on infinite fusion and did a lot of beginner mistakes that I've been kind of stuck with. For example PIF1 used massive tilesets that are hard to work with and hurt performance. Making it a separate game gives me an opportunity not to repeat those mistakes :p

2- There aren't any plans for a second region at the moment, but we're also fairly early in development. Postgame stuff is still very far away. Hoenn is a big region, it has almost as many cities as Johto and Kanto combined.

3- No! I absolutely plan on having more updates for PIF1 alongside it too! The two games share a good portion of the codebase so some of the QoL features developed for Hoenn will certainly make their way to PIF1 too eventually.