Next they will doctor a fake "US Country" and then they will issue visas for it :) the poor souls who have never seen the US will feel they have come to the US :) Level 2 :)
States recognize whatever passports they want to; usually this is based on there being people with those passports that the state would like to be able to identify and authorize to enter, and usually you have to control territory to do that.
[1] https://en.wikipedia.org/wiki/Travel_document#American_Samoa
[2] https://en.wikipedia.org/wiki/Travel_document#UN_travel_docu..., http://www.icao.int/Meetings/TAG-MRTD/Documents/Tag-Mrtd-20/...