War Islands character slots are planned to be completely separate. The plan is for each account to play one noble on the war island, and this character will not affect any other character slots you may have. IOW - playing a character to the War Island will not reduce the number of active nobles you have to play on other islands.
Hopefully, increasing the nobles:region ration, and thus the nobles:realm ratio, will help to increase the pressures to form new realms. If by no other means than allowing realms to spawn new colonies.
WI - Strictly speaking, yes, the characters there don't count towards the character limit. However, there are a number of people who play less characters than they are entitled to, namely because they feel they don't have time for more. If such people start a character on the WI, then they are likely to remove one from elsewhere.
Density - Increasing the nobles:region ratio has no impact on nobles:realm ratio if no realm dies and all characters remain. The only other ratio I can think of it would affect is regions:realm, which is a ratio if lesser importance. And if it is considered that the current nobles:realm ratio is too low (which I do think it is), then if increasing it only serves to break up the realms to increase realms:continent, then you'll just end up returning to the unsatisfying point of origin as far as nobles:realm goes. Increasing realms:continent, without decreasing nobles:realm, would require merging continents together.
In the end, though, it all just seems like band-aids. All "fixes" are to extend the life of the game a little, but there is no solution in sight for stopping playerbase decay.
