14 out of 16 Uruguayan clubs are in Montevideo!
http://en.wikipedia.org/wiki/Uruguay..._Divisi%C3%B3n
I think everyone is sensitive to the issues - but CD, Liverpool has 2 main clubs in a big football league. If they had 6 pro clubs it'd be considered madness. I don't think your comparison does your argument any justice.
I think it all boils down to objectives / ambition. If the goal is to have a better standard largely professional league that truly represents the pinnacle of the domestic game and has ambitions to get further in Europe, the number of Dublin clubs appears to be too many.
If the goal is just to have a better, more stable domestic league but largely only on a semi-pro basis with no lofty ambitions wrt quality then the current model could probably still be the foundation.