First, it’s important to keep in mind that when we say fossils are revived, what we really mean is a specimen was built using a copy of a genetic sample. It doesn’t mean that the pokémon is literally revived from the dead, memories and all. The pokémon’s sanity is typically fine, as it was born in this time period and has no memory of its species’ prehistoric lives or habitats.
The problem, of course, is in the ecological side of things. Fossil pokémon can’t be reintroduced into the wild, for example, because time has progressed to the point where the ecosystem has stabilized without them. Thus, reintroduction would actually be considered the introduction of an invasive species, which could be disastrous for some regions. (Hoenn, for example, as one of its registered fossil pokémon was an apex predator.)
That and a fossil’s survival rate may be questionable at best, given that it may be difficult to find adequate habitats or alternative food sources for them. For example, the archen line lived in the jungles of Unova and fed primarily on the fruit of the archen tree. However, due to climate changes and tectonic shift, Unova is no longer blanketed with tropical rain forest expanses, and the archen tree itself is completely extinct. While it may be possible for archen to at least survive in a comparable climate (the Amazon, for example), the question is whether or not it will adapt to modern local fruits on its own, what with the fact that archen fruit supposedly comprised much of its diet. (This can be a bit of a challenge, even in domesticated settings.)
Thus, if fossils are revived en masse, rather than occasionally for research purposes, the resulting pokémon can only be kept in captivity—except for kabuto, which can be introduced to wild kabuto populations, but that’s a different story. In all other cases, it’s a bit too risky.
In light of all of this, you could say that the question of whether or not it’s ethical at all is still up for debate. Naturally, scientists would take the best possible care of captive fossil pokémon, and contrary to popular belief, most respectable scientists are concerned enough about ethics to revitalize fossils responsibly. (The idea that we would create a specimen capable of thought, study it, and then cull it without a second thought is a gross misrepresentation of modern pokémonology.) Still, whether or not we should revitalize fossils is a bit problematic, as a life in captivity, or for the sole purpose of captivity, is not much of a life at all, according to some people.
I suppose this is one of the rare instances where I leave the question up to you, readers. Officially, there are rules that ensure the process is done responsibly, but there really is no word on whether or not creating life is truly ethical. It’s a problem scientists have faced with artificially created pokémon—such as porygon and voltorb—as well.