I like this idea, too. Here are just some thoughts that may help witht he way this could al lbe organized.
I think these "grouped countries" should still retain a national home, and international leagues should be fluid enough to ensure that most teams in each league are indeed from the same country if possible. Also, instead of a "Small Countries" league, perhaps these leagues could be organized regionally like "European International", "Pacific Intnl", "Central Asia Intl", etc. The point being that even though grouping countries into more acitve and exciting leagues is definitely a great step for improving the BB experience for teams in countries with few active teams, maintaining some sort of regional identity I think would also be beneficial.
I do recognize that this would a very complicated thing to pull off, though. Maybe someone has a suggestion for how to maintain regional flavor in a way that isn't too complicated...
Don't ask what sort of Chunks they are, you probably don't want to know. Blowing Chunks since Season 4!