So it is pretty obvious the only limitation of Island Sanctuaries is the server space it takes to run the system and cost associated with it.

It is a lvl 1 quest in Sharlayan that sends you to Moraby Drydocks. Either they are beta testing the system on end game players with the expectation of expanding it or they just could not think of a better place.

I think the best option would be to put it in Ishgard as a lvl 61 quest. This solves the issue of a bunch of f2p players taking up server space and brings it lower in level enough to give everyone the ability to access it.

In the long term forcing people to do what will end up being 400+ hours of MSQ just to access Islands after 6.0 Endwalker is pretty extreme for new people.