An input list of all current passport issuing countries would be useful. The Scotland problem doesn't arise as they don't issue passports (the UK does).
Israel issues passports, but people holding an Israeli passport also hold some other country's passport if they want to travel to any other country in the MENA region. Also, recognizing Israel as a country will lead to the most interesting discussions in your software's support fora.
This means Google would be determining whether Taiwan is an independent country or not, making either China, or more probably Taiwan unhappy. Something besides the browser would need to determine what your list of countries is, like the site itself... but a solution like that is much less elegant. Chrome having regional behavior also just sounds like more mess for devs. Some sites will deliberately want to pick sides, and should be able to.
Geographic data will have to come from somewhere, to add countries to this list that "don't exist" in whatever the built-in list of country options is.
In the case of The Netherlands, this is plain wrong.
The Kingdom of the Netherlands contains four countries, being The Netherlands, Aruba, Curaçao, and Sint Maarten. According to ISO 3166-2, there exists a country "The Netherlands" which contains the other three. Close, but not correct.