The even playing field is that it is competition for winners of their domestic competitions to effectively determine a champion of champions. Exactly the same as the European Champions Cup.
I highly doubt any of the participants would be keen on some entrants being teams created just for the competition and I haven't seen it mentioned anywhere else that Australia's intention would be the State of the Union teams would be the entrants.
Obviously all teams in S8 are formed along the same lines for all participants. No one is suggesting anything different.
Its either the Champions League where say the Rebs and the Brums are the 2 highest ranked Aus teams and they play the top 2 NZ SA and Jap teams , and we immediately disenfranchise the majority of the Rugby supporters in this country because their teams are not involved.
IMO this only works if you have a 2nd division cup playing out at the same time keeping the fan engagement.
This concept is less marketable and will get less TV money and viewers.
OR
Each Country involved in S8 form up 2 selected sides (of eligible National players) from their domestic comp. Call them North & South - Coast & Mountains - what ever works. But 2 sides of test standard players.
This should be the next best rugby tournament on the planet after 6N and RC
IMO this will rate and be far more marketable and bring the TV $$$ because it keeps the total fan engagement