Pallet Town is originally based on Satoshi Tajiri's hometown Machida City, which was known for being more rural during his childhood. Location-wise however, Pallet Town is based on the Japanese port town of Shimoda. Pokémon in the past has tried to become more culturally ambiguous despite the region. This version of Pallet Town however has completely integrated the culture of the real-life Kanto region and integrated the structure of Shimoda.
A few asset bases came from the FireRed and LeafGreen sprites, though most of the things in the frame have been modified or are original.