your on the right track Dane I would suggest 8 teams though, a Melanesian Conference (Honiara, Port Vila, Suva, Nadi) and Polynesian Conference (Apia, Nuku'alofa, Rarotonga, Pago pago).. there is no doubt talent there and this will be the way for the sport to grow.
I agree rather than shrink domestic competitions establishing this sort if regional league is a much better option