Yeah.. I can see both sides, but I tend to agree that over-regulation should be avoided. And a similar goal can be achieved by changing the grandparent rule to the parent rule, avoiding icky things like quotas which force nations hands in how to pick their team.
A high level example, England the next 2 years. They need to decide what's best for them. If they want to stack their team with 2nd rate NRL stars looking for an easy rep jumper, then they can within the rules. Is it the best option for them? Short term, *maybe*. Flimsy claim at best that the players they are looking at are any better than home grown English-born. Long term, I'd say a negative for English development. But if they get a big win out of it, it might spur on greater growth. It's their gamble.
If I was in charge of the USA or another nation that might pull in Aussies to supplement their squad, I'd aim for a roughly half-half split. You need to give the best week-in-week-out players the reward for their work. You also need professional experience. Get some committed guys from pro-levels in each position as mentors for the less experienced players.
If you lean too heavy towards home grown, you'll get towelled up in the pool stages.
If you stack it with Aussie-Americans you'll get flogged in the quarters anyway, if you even progress.
Find the compromise that best develops the sport and still gives you a decent shot at making the quarters. Finishing above Fiji is gonna be a tough ask but it's not impossible.