The couple, childhood sweethearts who rekindled their love later in life, vanished while camping in the remote Wonnangatta area in March 2020.
It's alleged Lynn killed them sometime after 6pm on March 20 before setting fire to their Bucks Camp campsite, where he was also set up.
The 56-year-old former airline pilot has pleaded not guilty to two charges of murder.
A summary of police evidence, released in Melbourne Magistrates Court on Tuesday, sets out some of the allegations against Lynn but does not outline details of how or why they say he killed the pair.
But police allege the circumstances of their deaths and Lynn's behaviour afterwards is consistent with him having intended to kill them, or at least cause really serious injury.
It's alleged Lynn contaminated and staged the crime scene, intentionally destroyed evidence and removed evidence before disposing of the couple's remains.
Police allege Lynn put a gas bottle inside the couple's tent and set fire to their camp, before packing up his own campsite.
Officers believe it's likely Lynn put the bodies in a box trailer he was towing before disposing of them as he left the area on the Dargo side of the Wonnangatta Track via Grant Junction.
"In May 2020 and/or November 2020, the accused returned to the bodies of Hill and Clay, where he further tampered with the human remains to dispose of the deceased," the document alleges.
"This involved burning, dispersing and partially interring them."
Mr Hill was reported missing by his wife on March 21 and the burnt-out campsite was found on March 27. Ms Clay was reported missing the following day, leading police to discover they'd been camping together.
Their bodies were not recovered until November 29, 2021 - a week after Lynn was arrested.
The campsite was re-examined by police in March 2022 leading to discovery of bone and lead fragments.
Ms Clay's DNA was found on the lead , confirmed to be part of a bullet, while analysis on the bone is still underway, according to the police summary.
In a committal hearing, testing the evidence against Lynn, his barrister Dermot Dann KC referred to a potential scenario considered by police involving Mr Hill grabbing Lynn's shotgun.
"The two were wrestling over the gun causing an accidental discharge, or causing discharge, which struck Ms Clay in the head while positioned on the (passenger) side of Mr Hill's vehicle," he described.
Victoria Police forensic officer Mark Gellatly said evidence found on Mr Hill's car was consistent with that as a possibility but couldn't be ruled in or out.
"It's a possible explanation at this point," Mr Gellatly replied.
Earlier, Detective Senior Constable Abbey Justin said she recorded an interview with Lynn in July 2020, nearly 18 months before he was charged.
For about an hour she and homicide squad detective Brett Florence spoke to Lynn in the kitchen of his Caroline Springs home about his movements on March 21, 2020.
Lynn's car was one of a dozen picked up by automatic number plate recognition cameras at the Hotham Alpine Resort in a brief period when Mr Hill's phone was also in the area.
Det Justin took a photo of Lynn's car at the home. It had been repainted beige, from navy or grey at the time of the number plate recognition camera picture.
The hearing is set to continue next week.
