I thought I would post the official rules off of nintendo's pokesite.
Battle Rules:
Each match is played using the Pokémon Communication Club Coliseum, found on the top floor of the Pokémon Center in Pokémon HeartGold and Pokémon SoulSilver Versions. The tournament will use the GS Cup rules set, with some additional restrictions.
Each player uses four Pokémon during the battle, and sends out two Pokémon at a time.
The Flat Battle rules have an auto-level feature, which sets all Pokémon that are above level 50 down to level 50 for the duration of the battle with the following parameters:
Each Pokémon retains all of the moves that it knew before being auto-leveled
Pokémon that evolve after level 50 do not devolve when auto-leveled
Pokémon below level 50 remain at their actual level rather than being auto-leveled up to level 50 for the battle
The Pokémon’s stats are adjusted to what its level 50 stats would be
A player’s team may not contain two Pokémon with the same National Pokédex number.
Each Pokémon on a player’s team may use held items, though no two Pokémon may hold the same item during battle. Allowed items include held items from Pokémon HeartGold and SoulSilver Versions as well as from earlier video games, including Berries 1–64. The Soul Dew item may not be used.
Players may not enter two Pokémon with the same nickname.
Players may not enter a Pokémon nicknamed with the name of another Pokémon character (for example, a Lucario nicknamed “Spiritomb”).
Players found to have inappropriate/offensive Trainer names or Pokémon nicknames, as determined by the event staff, will be disqualified from the event.
Pokémon Restrictions:
Players may use Pokémon found in the Pokémon HeartGold and Pokémon SoulSilver Versions National Pokédex, from 001 to 493, including those Pokémon imported from earlier video games, with the exception of the Pokémon listed below.
Ineligible Pokémon
The following Pokémon NOT eligible for use in the tournament:
151 – Mew
251 – Celebi
385 – Jirachi
386 – Deoxys
489 – Phione
490 – Manaphy
491 – Darkrai
492 – Shaymin
493 – Arceus
Restricted Pokémon
During battle, a player’s team of four Pokémon may not have more than two Pokémon from the list below. A player’s Team Information Sheet may contain up to four Pokémon from the list below, as long as two non-restricted Pokémon are also listed on the sheet.
150 – Mewtwo
249 – Lugia
250 – Ho-Oh
382 – Kyogre
383 – Groudon
384 – Rayquaza
483 – Dialga
484 – Palkia
487 – Giratina
Move Restrictions:
Pokémon may only use moves (including those learned in an earlier video game) that have been learned through one of the following methods:
By leveling up
By TM or HM
As an Egg move, through breeding
From a Move Tutor
Already learned by a Pokémon that was received at an official Pokémon event or promotion
Already learned by a Pokémon that was received from another Pokémon game (such as the Pikachu that knows Surf from Pokémon Battle Revolution)
By Smeargle’s “Sketch” move (limited to the above moves learned by Pokémon from 001 to 493)
Of course Alien Games is running the tournament so they may alter these parameters.