Hello @ SuperDevFavour. We have been working with compliance and dynamic blockchain policies for a very long time (from the making way to declare dynamic rules on-chain up to drafting an ERC standard on the topic), and I can confirm the arguments, problems, and motivation raised in your message. The ‘isolated islands’ is a good metaphor in this context.
The need for a clear separation between contract logic and policy logic, as well as for composability and flexibility, is crucial – especially for RWAs, gaming, and other regulated use cases, which seem to be increasing in number daily. And I would also pick ‘reusability’ (full or partial) as an important trait for on-chain policy.
I’d encourage you to check this proposal ERC-8006 (Universal Policy Engine) which solves mentiond problems and provides required capabilities. This is achieved through DAG/nodes architecture, where each node is a rule of policy