Lavos being sent to the DBT isn't the problem. It's how the Chrono Trigger team / Eclipse Magus (and to a lesser extent, Serge) get there that is.
Here's how I see it:
If going to the DBT of one's own will counts as time travel, time travel laws apply. This includes Time Traveler's Immunity and Time Bastard, of course. Since the CT team are the ones gating in and interfering with the battle between EM and the Dream Devourer, they're the ones covered by TTI in this situation. This leaves Time Bastard to work on Magus, set at a Time Error clearly before he becomes EM. So Eclipse Magus gets erased from existence before he can even fight DD. And thus, the scenario as played in CTDS becomes impossible. The EM/DD fight may still have happened, but there's no way that Crono et al. saw it.
If going to the DBT of one's own will does NOT count as time travel, however, the new ending can stay intact, just with the damn stupid "Schala erased their memory" excuse.
Of course, there's also the possibility that I screwed up and am applying Time Bastard wrong. If I am, I'd really like to know about it before I make an even bigger fool of myself.