It's not only about NT, but also about merchandise. Domestic players give much more for merchandise than foreigners. If player after 5 seasons in my team can have second nationality he can bring me additional income of merchandise even if he is playing for NT of his first nationality.
In general I like this idea.
I agree - bottom line is the change if implemented successfully would help create more parity at National Team level, it would maybe encourage clubs to buy and keep and phase out trading or consistently upgrading...
Remember the larger nations will always be able to do what the smaller ones can. (ie. Buy up foreign players etc) BUT the difference is they can only allocate the same number of NT roster spots.
Where this would help smaller nations is say I (Japanese team) buy a semi-decent US Trainee...the US NT managers would have to call him and play him at least once to prevent him from ever playing on the Japan team and with many other US trainees chances are if i train him well (but not that well :D) I can keep for 5 seasons, convert and then maybe he'll play for Japan or at least he'll have dual nationality (so I get rewarded with some more merch for the trade off of not trading him)
A US team buys a Japanese (or other smaller nation) trainee... chances are much higher that he will feature if trained reasonably well for the Japan NT so this would mean he could never be converted to a US NT player although again the US team has the benefit that in 5 seasons he too could be considered US by his inherited nationality for merchandise benefits.