Quote:
Originally Posted by EldrickOnIce
You weren't 'defeating' your own Pokemon guarding the gym, you were training the ones you were fighting with. This raises the prestige of the gym, allowing for more Pokemon to guard it.
Unless I missed something. 
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Ok, I reread the gym info online.
Me placing a crap 100CP pokemon into the grey gym allows for me to claim the gym. Then, similar to team mates, I/we can attack said pokemon to increase prestige of the gym to "level it up". I'm guessing the game uses the pokemon you drop off and pretends it's you, but allows you to fight you, because you're not you in the gym. You don't raise the CP of your pokemon (ie: Train) but you level up the gym... I think.
(Kinda like this dialogue at 2:16)
You get EXP for such battles, even if you're "fighting yourself". Consider fighting yourself is just fighting a clone of yourself. Over time, defeated pokemon will be replaced by stronger ones either by friendlies or by opposing factions. For instance, I replaced said crappy pokemon with a 460 Hypno after "battling myself".
I know that when I defeated my own crappy pokemon, it was replaced by a stronger one after the battle.
So both of us are correct. I think.