So instead of them being humiliated at the World Cup, you want them to be humiliated in front of their own fans? That's not a solution either. What these smaller teams need, is more frequent games against equal opposition. I suggested this elsewhere but the Sevens structure would be a great way to give these countries the opportunity to play against each other, something that otherwise simply can't be done logistically or financially.
Let the 3rd placed teams battle it out in their own knockout stage, the 4th placed teams, and the 5th placed teams.
Example:
Italy, Scotland, Fiji, Japan play for the Plate
Tonga, Namibia, Samoa, Georgia play for the Bowl
Romania, Uruguay, Portugal, Chile play for the Shield
This would be much more beneficial than excluding them from the RWC. They get to play for some silverware and they play in games they mean something. Italy is a perfect example of a country that never has anything to play for. They are never good enough to beat the tier 1 nations, and too good against the tier 2 nations they face and finish 4th and 5th in that group.