In this Vs world one loss, even if they could come back still means they lost the match, its what everyone has agreed on somewhere. Besides, Sacred Ash is a Recovery item not a held item. Ho-oh cant use it on itself (same as Lugia using potions) nor could it as it would need to faint then have someone use it.
Ho-oh didnt destroy the now Burned Tower, a lightning strike did. And the fire from the lightning killed them in which Ho-oh 'then' revived them when it fled. The only feat shown was in an anime flashback where the flames ashes gave life to the land, attack wise it has no feats... Even if we ignore damage power its still got the x2 type advantage.
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"Gonna need more chloroform..."
"If you look down on us, judge us, condemn us... then you shall fear us!"
A wild Ho-oh is always holding the Sacred Ash though, so presumably, it would activate when it faints. This is evident by the fact Ho-oh comes back to the Tin Tower in Heart Gold if you make it faint after beating the Elite 4.
I'm pretty sure Ho-oh destroyed the tower with Sacred Fire when people who were once loyal to it tried capturing it to use its power for themselves, which then he struck back and fled. And feeling guilty for the death of three Pokemon that perished in the fire, he revived them with the mystical powers of his signature move and made them into the three legendary beasts they are now.
At least that's how I remember it. The games and the anime usually contradict each other on things like how the tower was originally destroyed, or how Mewtwo was created/born, etc.
Could flip into this can it use it or not thing, but its easier to go by one faint is a loss.
Ive seen several things saying lightning, havnt seen that one. Blah, setting fire to an old building, a normal Flamethrower could do that. Only difference is its ashes can bring life.
__________________
"Gonna need more chloroform..."
"If you look down on us, judge us, condemn us... then you shall fear us!"