It's never really explained why Alhazred created disharmony between the islands (aside from For the Evulz), but think about it... this seems to be done as insurance that the multiple islands won't band together and rise against him if the denizens discover his true tyrant nature. His guards can take out a rebellion on the main island easily, but an entire gathered army from all the islands? He had no choice but to prevent that from happening.
It's implied that he intended to "return" the treasures to their rightful owners while feeding them stories about how he rescued them from the clutches of the other islands who stole them, helping to cement Alhazred's Good Publicity. With travel between the islands shut down, it's not like any of the leaders could get the others' sides of the stories even if they calmed down enough to try.
The choice in accusations is also a testament to how well Alhazred could play to the islands' prejudices. The Winged Ones are very serious and haughty, unwilling to put up with the Isle of Wonder's nonsensical nature. The Beast keeps to himself, which contrasts with the gregarious nature of the Isle of Wonder. The Beast is based on a French story, so accusing the Druids (English) is a play on that old rivalry. And the Celts and the Romans also had a history of mutual dislike...which would play into why the Druids would believe the Winged Ones stole their oak. Also, investigating the story would require all four islands to get together without Alhazred on the Isle of the Crown, which conveniently remains neutral.
Some of Shamir's behaviours make sense when you look back on them:
Why, for example, does he not just zap Alexander to death on his multiple attempts and chances he had to do so? He’s Fighting from the Inside - he’s doing a poor job on purpose. So what makes the final scene different? Not only is Alhazred in the room with Shamir but he flat out orders Shamir to kill Alexander. No loopholes.
Shamir may have been ordered to make it appear that Alexander simply blundered into one of the Green Isles' many hazards. Openly executing the crown prince of Daventry would almost certainly bring the wrath of King Graham onto Alhazred's doorstep.
Why he is so insistent on getting peppermint all the time? Apart from the obvious way to sabotage Alhazred’s plans, he’s doing it to relieve stress.
Why does he take time? Simple Anti-Frustration Features to give the player time? Maybe, but in-universe? He’s holding back.
Related to the above, one way to deal with Shamir is to offer him peppermint which makes him drunk. So why would he take this, disobeying Alhazred’s orders? Shamir doesn’t take it because he has poor impulse control - he takes it because it’s Liquid Courage, so that Shamir can commit suicide and die on his own terms. That's the only way for him to escape his master's service outside of having the bottle given to someone else.
The secret passageway Alexander uses in the castle exits in Alhazred's wardrobe... and is only a few twists and turns from a peephole that looks into Cassima's bedroom, and she doesn't seem to be aware that it's there. Sure, Alex uses it to have a brief, touching moment with her while she's imprisoned, but what was Abdul looking at?
It's unclear if Alhazred himself knows the passages exist. The ghost who reveals their existence to Alexander says that no one knows of them anymore, and if Alhazred did know of them, he would likely have had that hole in his wall which shows his room from those passages filled in.
There is the implication that Alhazred was going to kill Cassima after the wedding night. Think about what that implies.
In the Steam Train playthrough of this game, Danny questions how the Pawn Shoppe is able to turn a profit if people are allowed to undo their trades whenever they want. Ross suggests that due to the low population of the island, this is the only way the shoppe can get any business.
Or at least, Alexander can do that after pawning his ring and paying him a coin from Daventry.
