Well, there aren't any obvious alternatives, for one thing: .ch is Switzerland, .ca is Canada, etc.
I don't know, it's a problem for politicians and standards bodies. Even if not "British", Chagos is still inside the "Indian Ocean", so the reason for the country code remains.
Ok but that sort of takes away the entire argument that .io "belongs" to these people somehow. It doesn't, it's purely a political issue. It's not some natural resource or anything they'd have claim to otherwise. (And seems that Mauritius might have claim, meaning no extra ccTLD.)
It's fine if people want to raise awareness to Brits behaving badly. But saying .io should go to those people is misleading.
.vi is controlled directly by residents of the US Virgin Islands. The primary contact address is on St. Thomas, and the NIC follows some pretty restrictive domain naming rules to favor the residents of the US Virgin Islands. It's run by the local telecom and presumably all money generated from .vi revenue goes to the island economies.
That is much closer to the ccTLD original intent than any of the British territories have seen (.io, .vg, etc). It's not misleading to suggest that the territory control their own ccTLD's destiny, given that was the original presumption of the early IETF and many of the original NICs.
Of course it's not a "natural" resource as a digital artifact of the internet economy, but that doesn't mean the ccTLDs weren't intended to be a resource to a specific locality, and that that specific locality shouldn't most control or best benefit when that ccTLD is exploited by foreign interests find a different use/meaning/domain-hacks for that TLD.
