Each TLD owner decides their own rules. Some countries like .nz require residence or a local business entity for their TLDs, while others like .co are happy to let theirs become generic TLDs.
So it would hinge on there being a rule if there can be 2 letter tld that are not country specific. The common usage is, that for some 2 letter tld that country specific meaning is not existing. So at least this rule is pointless and should be adjusted.
Also, and probably the most important thing, who would inherit the "rights" to .io, if the country no longer exists. Since small countries seem to generate income by this, this is all about money. There are over a million .io domains, I read somewhere.
I expect a lot of squabbling about this, till it either becomes a "regular" tld or some people abuse their power to try to destroy it, because they could not benefit from it.
The regular is in quotes, because those tld that are not country codes or com or org are not really in use much. They exist, yeah, but does anyone regularly use one of those? Do they make up more than 1% of the internet traffic? I seriously doubt that.
The rules are clear. only country domains can be 2 letters, to match the 2 letter country codes they are based on. if we allowed other 2 letter domains, a collision could easily occur. for example, if Scotland became in independent country, we already have an issue as the obvious 2 letter domains (.sc or .al) are both taken already (sechelles and albania) so something like .sq would likely be used. but we only have even that less than ideal option because people can't otherwise use .sq .
No one associates .io with that "country" it belongs to. And the only problem that could arise would be, if a real country emerges that would be given the IO country code. Which is unlikely, because it was already historically used. Codes like SU will not be reused either. Or BU, DD, YU.
This domain stuff is not international law or something. The tld .eu is not a country either and it exists and there are iso codes that have no tld, so much for clear rules. If they wanted, they could have 1 letter tlds.
Anyway, there is no need to reserve the 2 letter code io, as it will not be reused. For 2 letter codes that are not in use, this is different, as they are reserved for emerging countries like Scotland might be.
In my opinion the only thing they could argue about, who has authority to give new .io domains in the future. But converting the .io from country to general should not be a problem.
At the time those other tld were removed the internet was a bit smaller and those country codes were much more locally used. This time it is high profile hosts that are not local usage. So for hosts and users, they better find a solution.