Ok, a bit of wild hypothesizing here:
So, as us relics of Phantasy Star past may recall, there was a little twist at the end of Phantasy Star2: Earthmen were behind Mother Brain.
And as we saw in Episode 2, time travel is very possible in this 'verse.
So... What if this Earth was the same earth from the classic series (or at least from a similar timeline)? Having poked at the wrong (right?) things, they bridged to an alternate timeline that led to ARKS and the Oracle fleet. This, in turn, shifted things from their original course. No ARKS, no Al. No Al, no interference in the original plan. Aether leads to the collapse that forced the Earthmen to bail, possibly given direction by contact with a worldship from one of the endings of PS3.
They reach Algo, design a new "Mother" system based on the old (maybe even using salvage from it, or just bringing what they could along), and the old timeline happens.
But this time, ARKS ended up entangled with the situation. And so the timeline changes... Perhaps that generation ship from Palma does still arrive, but to a far different welcome than in the original timeline...
Just happened to think about this while playing. Feel free to call me mad