The second and third divisions of the NPC were reasonably well followed back in the day, but yeah, they paled compared to the first division and it was rare for a promoted team to be competitive.
That said, if you added Tassie and NT to the GWS and the current bottom seven (Port, Gold Coast, Brissie, Richmond, Adelaide, Bulldogs, Melbourne), you'd be starting with a damn good following. The trick would be keeping it, ensuring the skill levels are not too dissimilar to the first division, and that promoted teams have a chance. Can it be done? The AFL probably wouldn't mind it in the end because at finals time, it'd be a handy little earner, with BOTH divisions running right through to the last week.
It'd never happen. If the re-organisation/destruction of the NPC taught me anything, it's that teams will fight tooth and nail to be kept in the top division and will use every legal means available to them. So this is the problem - keep expanding the AFL until you get to having enough teams for two divisions, but then NOBODY will be willing to go down to the second tier.