At first I skimmed the thread, and dropped a couple of relevant points. Now that I've properly read through, I'll add more commentary.
You have interesting ideas. the connections you draw are innovative (especially Mother Brain as a corrupted Schala clone) but it all fits together.
the 'strange red rock' is undoubtedly Dreamstone, and its properties as a powerful catalyst are consistent with the influence of Lavos via the Frozen Flame. I believe it's canon that the Frozen Flame is a piece of Lavos' shell which broke off, and acts as a proxy/intermediary between the surface and Lavos.
Dreams are also an important theme. Dreamstone, cultivating dreams, and the Dream Species. Here's another line from Zeal, taken from the literalist retranslation:
[Young Woman]
Born of dreams, returning to dreams...…
Beings such as that exist as well.
At times, human prayers and desires borrow
the power of Lavos-sama and materialize.
Masa & Mune 'live in' the Ruby Knife/Masamune sword, and Doreen 'lives in' the pendant. These are powerful artifacts made of Dreamstone, crafted by Melchior and charged up by Lavos' energy via the Mammon Machine. It seems that Lavos' magic and human thought, channeled through Dreamstone, can create Dream Species, which are sentient beings akin to Tulpas. At the end of Frog's sidequest, Masa & Mune state that they can reach their full potential now that Frog has made peace with Cyrus' ghost, which confirms that they depend on human willpower alongside Lavos' energy or magic (within the medium of Dreamstone).
It all fits together.
The Rainbow Shell is somewhat more obscure, but it's clearly a powerful artifact (given that it can be worked to create your most powerful equipment). The idea that it was imbued by the Frozen Flame is the most plausible explanation I can think of, but I'm not sure of the exact process. It was most likely embedded in Dreamstone as well.