Aiight good arguments, let me say a few things.
fIRst off, Undyne does indeed initiate Green Mode from anywhere in the bullet box. Second of all, it does not have a range, even though she can only use it in a fight, which they would be in for them to be... fighting.
Second, you must bring into account the rules of VS battles. This battle specifically says that they fight on a neutral ground, which, by my understanding, means no terrain advantages wahtsoever, not even teleporting someone out of the said Neutral Ground.
Third of all, according to the rules, they are bloodlusted. This means that even though Undyne is way too chivalrous to not give someone a spear (this is canon btw), she would not give him one if she is bloodlusted.
Fourth, a lot of Sans' dps comes from Karmic Retribution, which deals more damage depending on one's kill count, and Undyne canonically (once more) has killed a maximum of four humans, so the KR is pretty much nonexistent. Also, Gasters Blasters' damage does not indeed stack, so it's more than a quarter of an hour no matter what.
You also mentioned Sans' intelligence. This isn't technically a thing, but I'll give you the benefit of the doubt and say he's smart. wElL he is once more bloodlusted, which basically means he's gone savage and has practically no capacity for rational thought. So thinking about teleporting Undyne in front of her own attacks is pretty much impossible (for multiple other reasons as well). And while Sans can attack outside of his turn, it's only to a certain extent: he can't use Gaster Blasters outside of his own turn, so that's out of here. And his outside-of-battle bone attack isn't very constant, so it pretty much can't be constant damage. And finally, if he can teleport someone in front of their own attacks, then he could teleport you in front of your own knife and stab you with it.
Finally, there is actually no evidence whatsoever that Sans can teleport you into an attack; it seems like he simply temporarily blinds you and then brings the attacks to you, which apparently stops working after a while.
Once more sorry for a long post, and how ironic that I listen to Megalovania as i describe the demise of the owner of that song. (theoretically)