Personally I think that relocation is a bad idea, but if you were going to do it the best way to do it would be to do it in a way that would have the least impact possible on the clubs, so a small restructure of Sydney to start, then if necessary big relocation to other cities.
For example instead of relocating Cronulla as is often suggested, force the Dragons to move full-time to the Gong (maybe minus a couple of big games like the ANZAC day game that they can keep in Sydney), then force the Sharks to broaden their focus to all of the surrounding regions of Sydney (including all the traditional Dragons areas in Sydney) instead of just the Shire, and make them represent the fact that they aren't just the Cronulla Sharks anymore with a minor re-brand so that their brand encompasses that whole region as well. Then if all goes well in a couple generations you'd have a 'South Sydney' team and a South Coast team where you used to have two teams fighting over what is effectively the same patch of turf.
Take Manly, they're stuffed at the moment, but relocating the only club north of the Bridge to the other side of the country would be a dumb idea, so instead of doing that the NRL should buy the club back from the Penn family, then restructure it into the 'North Sydney' club and re-brand to represent that fact, piss the Bears off when they try to intervene and meddle, then once the club is stable and relatively established sell it on to the highest bidder with the understanding that the club must focus on all of NS. Then in a couple generations instead of having a tiny club on the Norther Beaches ignoring the rest of North Sydney you'd have the making of a relatively big club that represents the whole region.
If the NRL was really going to push relocation then stuff like that is where they should start. There're other areas where the solutions aren't so simple like 'East Sydney' (one of either Souths or the Rooster probably have to pack up and leave), and figuring out who stays, who goes, where and how they stay, where they go, in Western Sydney will be a nightmare for all involved, and that is where you're big relocations would come from, but even then there're probably a few solutions (like Tigers to Campbelltown/South West Sydney full time) that could be explored.