I have long been a believer in a combined competition, but my proposal is potentially fraught with errors - I'm happy to try to iron them out though.
I would have a sort of multi-faceted structure to it.
Firstly, I'd have divisons - the top division wouldn't be based on merit (per se), but ability to field teams, with the requirement being ~6 teams per age group + 8 in the Opens, which I think a fair amount of schools could do - most GPS and CAS schools, if they tried, and maybe an ISA school or two.
I think that each team should be playing for some form of "premiership" - realistically this would involve an official points table, which could be easily managed online as the SJRU do. I know that ISA do this to an extent, and I think it would add value and meaning to those in lower teams. Further, you could award a shield to the school that does the best in each age group/across a junior-senior division/what ever other configuration you want, to point at organic change.
Significantly, I would ensure that every game is played against the correlating team of the opposition - for too long I've seen Riverview's 6th (for example) go up against Newington's 4ths (for example), only to lose and have the school's overall win-loss ratio for the day look worse.
Secondly, to maintain the obvious value of existing competitions - like the GPS, CAS, ISA, CHS etc - I'd have a conference system within each division that represents existing organisations - where possible. This basically ensures that the rivalries and traditions that have developed over (up to) hundreds of years) continue, as each team is assured a game with opposition within that conference. These conferences can still award a GPS premier based on results, and if it's the case that a few schools from within a conference aren't in a division (e.g. Grammar, High, TAS, and others being unable to field the required teams for Div. I) then they could negotiate to play the schools outside their division if they want, though it will only count towards an independent conference point system, not the overall standings.
This is largely modelled on the system used for College Football by the NCAA. I am not sure whether I'd support a finals series at this stage - even if I did I think it would be limited to the 1st XV, otherwise the entire idea of a School v School mentality across the age groups is undermined.
On a side note, the person who said that Riverview fails to match Shore in terms of numbers is in error. According to this
http://www.shore.nsw.edu.au/file.php?fileID=7331, Shore has less teams in the 13s, less in the 14s, less in 15s, and the same in the 16s and Opens. Also worth noting that Riverview fields at least 2 AFL sides in U13, U15, and U17 divisions + in Opens has 10+ Soccer teams (the introduction of Socials soccer has been very successful).
Also, I am not sure that the quoted figure of 22/26 wins for Joeys over View is correct. I have a feeling that those stats include the wins that Joeys got over Armidale in the Cs, Es etc. in younger age groups. I swear I saw more "lost" suffixes when Joeys displayed the results at the end of the day.