The technical precedent here would be Phione (meaning you can breed a weaker version of Lugia with Ditto, but that one is a separate species whcih cannot evolve into a proper Lugia), but their design/look wouldn't necessarily have to be baby-like.
If we look at some epic legend like Dialga as being so strong that it could very well be considered a stage higher than your typical final stage of 3, then it would make sense if their pseudo-"baby"-version wasn't baby at all, but more like something between "Charmeleon" and "Charizard" in terms of personality.
For example, Ho-oh Jr. would look as mature as a Fearow, it just isn't a true Ho-oh and never will be.
These would be weaker, breedable versions of the epic legends that are banned by default, allowing those legends to participate in at least some form. So you'd have a proper Ho-oh either as a trophy or for uber battles, but if you wanted to use it competitively, you go for the pseudo-baby version of it.
That's what I had in mind.
I know phione is a precedent, but to be honest, phione is one of those pokemon I was talking about before; it doesn't bring anything to the table, design-wise; it's truly a watered down, cuter manaphy (and manaphy was already cute to begin with, so it doesn't even have that motivation behind it); I haven't been able to find a reason why phione is a thing, really; it seems to have even less purpose and reason than the monkey trio.
Having them produce different, unrelated species is what you are saying, but in that case, why bother at all by making them be born from the legendary pokemon?
If you want a competitively viable ho-oh, why not make a unique fire/flying bird pokemon that works as a
spiritual successor, with the same BST ratios and a lot of (or some) key attacks? it seems simpler, more freeing to the design process and doesn't increase the massive disconnect already present around legendary pokemon (how the (main) legendaries are
weakened in the games, from the power they're purported to have, both in the name of the games' official goal of "catching them all", or their unofficial goal of "use them to battle). It seems a very interesting design exercise, to capture the original's core, and make it a new, unrelated pokemon.
OR, better yet, give players the ability to
lower their pokemon's level at will, as purportedly happens in the anime and such; that way you can pit your level 40 ho-oh against your friend's level 53 bibarel, and have them be more matched. It could also mean, smogon-wise (which GF doesn't really care about), the end of banlists, as long as certain pokemon take increased penalties.
