I don't see what the issue is here, apart from non-DNS things (kicking people out, etc). If Chagos got autonomy, it wouldn't be keeping .io as its ccTLD - what sense would that make? And if Britain wants to have .io, they'd just need some other random island with enough of a presence to justify the country code.

Phrasing it as if somehow .io belongs to these people is simple intellectual dishonesty.