INTRODUCTION
It's no surprise that Sonic Team tried to deal with the concept of Time Travel, with the likes of Sonic CD and Sonic '06, but what it left was a bitter taste to fans of the concept - myself included - who expected some faithfulness to it from professional writers. What I'm trying to offer is a story that better represents Time Travel as an infinite loop, where events happen repeatedly and are forever changeless, with no grasp of their origins, using the Sonic Universe as a base.
THE PREMISE
After the events of Sonic Adventure 2, when everyone had gone their own separate paths, Rouge approached Eggman with the recently "stolen" Time Stones. She wanted him to build a device that would grant her eternal youth, but Eggman was reminded of something bigger when he glanced at those gems. Imprisoning Rouge and taking the stones with him, he decided to build Neo Angel Island, starting by expanding on ARK's model of the Master Emerald shrine, completing the "Hidden" Palace with murals of what had happened until then (including the so called Super Sonic prophecy against Perfect Chaos, for example).
In order to take Sonic and friends out of his world, he had to lure them into the new island, by using a menacing plot against the world they inhabit. He used the Time Stones to create a time vacuum outside Earth's atmosphere, and the remains of Death Egg were the first to suddenly disappear, having appeared you know when (before the game "Sonic the Hedgehog 2", making a nod to how Eggman built it already in space from its remains). In order to stop the vacuum, the Master Emerald was necessary, but little did Knuckles and friends know that it would only isolate the new island, making it disappear along with the vacuum in a time displacement event, as both pulled each other like a magnet.
The Master Emerald and the Time Stones would disappear forever along with the island, but the legend says that Angel Island didn't always exist before, having appeared some time from the future, and being nurtured by the same Echidnas - Knuckles' ancient civilization - that had found it and created the legends and lore that would be passed on to future generations. What was made of the Time Stones in the past? That's another story to be told... But Neo Angel Island is, in fact, what stories depict as the legendary Angel Island, the same ones that had reached Sonic and friends not so long ago (as told in the "Sonic 3 & Knuckles" manual).