Should have been a 16 team comp with the first names out of the hat being:
Perth
Adelaide
NZ
Brisbane
SQ
NQ
Canberra
Newcastle
Relocation of a Sydney club to Gosford
Relocation of a Sydney club to Melbourne
Then let the remaining Sydney clubs fight over the 6 spots. Either via merger or stand alone bids
Pretty much exactly what should have happened, there're only a few things that I either would have done differently or would need to be done differently for practical reasons.
Firstly, I wouldn't have bothered with the relocation to Melbourne, mainly cause none of the Sydney clubs would have taken it at the time anyway (maybe if they knew what we now know they would have, but they didn't know what we now know at the time, and all of them bar the Bears were stubborn about staying in Sydney, and there's no way you could have convinced the Bears to move to Melbourne, not after investing everything they had into the CC, the stadium and stuff), and secondly cause News never would have allowed it, they were all in on the Storm and Broncos.
Secondly I wouldn't have bothered trying to save the Crushers, News weren't having it.
One of their main criteria of the peace talks was only the Broncos in Brisbane, it was one of their deal breakers, if they didn't get that there was no peace and no NRL, and the Crushers were screwed anyway, they were broke, the ARL couldn't afford to support them, and News wouldn't support them, so you would have had lots of trouble saving them anyway.
I would have pushed hard to save the Chargers instead, I feel that News would have relented on the Chargers, they had bigger priorities like making sure that there was only one club in Brisbane and making sure that the Melbourne club came in and that they had control of it, and the Chargers had heaps of potential, in fact they are the only GC club that I feel had any great potential (to date), and they weren't broke and could have supported themselves. But even if News wouldn't relent on the Chargers (which is a distinct possibility cause ideally they wanted the Broncos to be the only club in South Queensland) then you've got the Steelers or worst case scenario another Sydney club willing to take their place.
Also the Reds would have posed a problem.
They were broke and after News pulled their funding they were stuffed, and the ARL didn't have the money to support them (nor would they have cause of the politics of the time), so unless we could find some way of supporting them they were dead (such as a finding a rich benefactor, increased sponsorship, extra money direct from the broadcasters for their participation, all of which would have been possible, but if it was really realistic it probably would have happened in the real world).
So that makes Perth a bit of a conundrum, maybe a relocation is possible, but for reasons I stated earlier that relocated club wasn't coming from a Sydney, and the only realistic options I can think of for a relocation (if we grant that the Chargers stay on the GC) is relocating the Mariners to Perth and giving them the Reds brand (which would have been possible, but would have been very shaky foundations for the club), and the only option would have been a new club being started up with new investors (which is an even more shaky proposition when taking the times into account).
Basically what I'm saying is there may have been no way of saving the Reds or a club in Perth...
I also would have engineered which Sydney clubs survived and which didn't and on what terms they did or didn't survive, instead of letting them fight over the remaining spots.
Also if I was in power and knew what I now know I wouldn't have allowed mergers either, believe it or not I actually supported mergers back then, pretty much everyone did, we saw it as a way to save as many clubs as possible, the only merger I didn't support was the Bears-Eagles merger mainly cause I was a Bears fan and the idea of joining with Manly was repulsive, and because as a fan of the Bears and like most Bears fand, I held out hope that the relocation to Gosford would save us (which was a reasonable hope at the time given that we'd been told that if we relocated we'd be spared from rationalisation), also anybody with eyes could see that Manly and Norths merging was asking for trouble...