I see nothing here that would stop it working on the bench.
Also, I'm fairly sure you can Candy with Dialga Active.
EDIT: Now this is interesting. It just says attacks on Armaldo - Meaning that, say, Torterra lvl X could ignore the 30 damage backfire for its attack by placing it Armaldo, who would ignore it.
The way it's written, you could not use Rare Candy to evolve with Time Aura in play. Time Aura prevents you from playing cards from your hand to evolve, and Rare Candy has you play a card from your hand.
Don't rely on a ruling from the WotC era -- WotC got a lot of stuff wrong, so it's likely that a ruling from back then is no longer valid.