I think his point is that these teams already receive support from the local community. Stripping those players away to serve an NRL system isn't going to draw an audience.
His main argument is what essentially sunk the NYC. That it became a matter of player welfare and it wasn't healthy to move these players away from their support system give them a taste of success only to toss them by the wayside if they didn't please the right people by 20 years of age.
For the record, I believe a national reserve grade would be ideal but I'm not sure how feasible it would be. You'd essentially have to find $40,000,000 per annum so each club could field a squad of 30 who can play full-time along with coaches, support staff, travel etc.
On top of that, some clubs are struggling to be successful in the NRL, what chance do they have of running another club on top of that? Does the game even have enough coaches who can do a quality job?
If V'landys and company can come to the table and answer those questions then go ahead. However if it's like other endeavours and they just rush it out it could be disastrous for the game.