Identity isn't in a team, its in your head. Speaking as a Scot, a United Kingdom team doesn't hold any fears for me. No loss of identity fears, mainly because I can't imagine a football team embodying anything with which I'd want to identify.
But where do we draw the line? A Team Europe would have a decent chance of winning the WC.....until Team Sth America weighed in.
I think it's to do with relative strengths of the individual nations' teams. (My knowledge of football is v. limited, but I thought that) Wales are a decent mid-level team, and Ireland have qualified before on their own merits, and I remember the years when Scotland would generally qualify for the WC. With teams of that relative degree of strength, imho it would be unfair (on the rest of the world) for them to club together to make a "superteam".