The residency regulation is designed to discourage National Unions from enticing
established adult professional rugby players in other countries to immigrate to their country and become available.
Things have become so brazen in the NH now that the Scottish Rugby Union (for example) have specialist staff whose job it is to push forward their "Project Signings" strategy, a campaign to find and entice players to move to Scotland to play for Glasgow or Edinburgh so that they become eligible to play for Scotland.
http://www.bbc.com/sport/0/rugby-union/18307303
This sort of outright theft of the development programmes of other countries needs to be stopped, or International Rugby Union will become the farce that it is in Rugby League.
IMO eligibility should be determined by:
► place of birth or nationality of either parent (get rid of the grandparent rule)
► place of residence with a minimum of six years continuous residence (with a small abatement for younger players)
► a "WR Eligibility Committee" whose job it is to resolve eligibility disputes and to hear special cases on a case-by-case basis and with a "no precedence" philosophy.