Where does the Leinster branch get the revenue to invest in grass roots in this scenario? College football creates its own massive revenue to find and develop talent, Leinster rugby is very much dependent on ticket sales and sponsorship which wouldn't trickle down if they're not getting first refusal on the players they produce.
I think all this would do is drive players to France, kids growing up supporting Leinster don't want to play for Munster and same in reverse. France starts to look a lot more attractive if they don't get to choose where they play.
An actual draft system like American sports isn't being suggested thankfully. I think an "unprotected player" system could work though. At the season outset a team has to name a core group of ~40 players, anyone outside this is free to move to another URC team. It'd be a hell of a legal job re-writing about 800 player contracts so maybe it's something to be phased in over three seasons.