Minor correction there, but I
think that's just because a Pokémon that evolves retains its current form. I think Larvestaable is having trouble making it evolve in a different way (with a Water Stone instead of a Fire Stone), not just making it stay Water-type!
I don't think there's any canon example of this that would be in base Essentials, but there are some Alolan forms that evolve in different ways, so maybe there's something in the
Generation VII Project off of which you can model this! I haven't checked for this specifically (not at home now, sorry!), but the changelog says Alolan forms have been added, so hopefully that includes their evolutions!