I've got to admit that I've been wondering whether the blighting/monolith wasteland approach will actually help matters (and I was one of those who thought it was a good idea at first). I think Scarlett might have a good point about it creating a general atmosphere of decay about the game.
Just a thought, but before doing anything too dramatic, what about issuing an in-game GM announcement appealing to players who aren't currently using all their playable character slots to use them to create a new character/s on a islands where they don't normally play? Some gentle encouragement might nudge players into boosting the character count as an alternative to losing an island. If the situation with low player density is explained ('cause not everyone reads the forum), some people might be willing to give an extra character a try.
Going back to the original idea of merging islands, what about creating a new, empty, island (based on an inverted, or otherwise messed around with, version of a current map to save on the workload). Then have portals appear in the capital cities of every realm on the two islands intended for merger so that nobles can pass through from the closing islands to the new island. Then have a free-for-all to establish or re-establish realms on the new island. The new island could also have its cities named after cities in the closing islands to transfer some of the history. I know it's not perfect, but I'm trying to think of ways to minimize the upset amongst players - i.e. keeping region names and most realms. I'm suggesting portal emmigration, rather than by sea, because sea emmigration gives too much of a land grab advantage to coastal realms with existing sea ports. The whole process would ideally happen over a few months - maybe close/blight one region on the closing islands every couple of weeks to give people a gentle nudge to emmigrate.
At least by creating a big event, it might stir up excitement amongst the players. I don't know. Giving people a new toy to play with (a new island) seems better than taking away about 70 regions (Anaris's estimate).
