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.
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.