Whether Nat1 should be as large or be national is one thing (or two things :) ), but the Championship reduced to 12 because the bottoms teams were getting smashed, IIRC.
I think the bottom teams of the Champs still get smashed by the big teams. Some team in Champs are still pro.
I think there could be a model where teams in the Championship need to be fully pro. It may need to drop to 6 or 8 teams initially, but, then allow teams to come up as they become Pro and if they have a sustainable business model. When it gets to 14 or more teams, then allow the Premiership to expand as well.