In that case the IOM would be doing exactly what the Caymans (e.g.) do; accepting FAA licenses ratings.
This would be a move forward for people unable to do the JAA IR but would not address the proposed residence limit for N-reg planes. Moving UK's N fleet to G (or to any EASA member state CofA regime such as M) would be a hugely expensive and complicated task in most cases, and impossible in many cases.
I am not sure how one can maintain an aircraft to EASA requirements if the aircraft or any part of it is not EASA approved.
Therefore I don't see how any registry that requires EASA maintenance would help - except to future FAA IR holders. And to be honest the DfT's objective of scaring the living daylights out of anyone wishing to do the FAA IR and go N in the UK is certainly working already!
It would also mean that anyone on the M register would need the same CAA medical as a JAA IR (PPL/IR or CPL/IR) requires e.g. the same pointless JAA audiogram requirement even for a privately flying PPL.
Funnily enough, the people that put a plane on the Cayman register are CAA-employed inspectors... Do they inspect to FAA standards, or CAA standards? Can you put a SR22 or TBM700C2 on the Cayman reg? (forgetting for now that the Cayman reg doesn't want SEPs)