Totally agree. The logistics though of any type of side trying to represent all of the Islands is the problem. Where do you base them? Do you play their games in several islands or do you play their games at one ground? How do you market the team so that it is inclusive of and accepted by, the different races and cultures of the Island nations?
The short answer is that you wouldn't even attempt to build a side that represents all of the Islands as it's an incredibly stupid idea. The only reason people even suggest that sort of thing is because they want to look like they're doing something without actually having to make the sacrifice required to do anything meaningful.
What you'd do is you'd treat each of those nations as what they are, individual nations with their own cultures, national identities, and challenges to face, and take a horses for courses approach to each with the goal of getting the best outcome feasibly possible for RL in each nation.
As a general rule that would just entail significant investment on the ground to develop local competitions and build professional pathways into the NRL, with development officers in each nation to manage and facilitate that investment and growth. In some cases that might lead to pro/semipro clubs from those nations participating in Australian competitions, or even something like the NRL buying into local leagues to help fund and manage them, but that should only be the goal if it's financially feasible and in the best interests of RL in that nation.
In saying all that, every time this discussion comes up I always come to the conclusion that it'd be mad for the NRL to invest all the time and resources required to achieve anything significant in the PI's when grassroots and junior footy is totally f**ked here in Australia. The NRL could get way better outcomes in junior development and growth for a similar investment simply by taking the grassroots in Australia seriously.