I'm not sure why Puerto Rico is allowed to put up their own team, other than the fact that they have their own government. American Samoa and Guam also fit into that category. Personally, I have no problem with it. If Puerto Rico was a state I could see comparing it to Alabama or North Carolina, but it's not. And it doesn't look like it's going to be a state any time soon--Puerto Ricans voted several times to remain part of a commonwealth and avoid statehood.
But that's not what my point is...
My point is that the Puerto Rico game is not all that different from any other Olympic basketball game, with respect to the NBA. Puerto Rico is certainly not the only team with NBA players. Argentina, for example, has five NBAers (P.R. only had four). Australia has two. Spain has three. Even little old Serbia has EIGHT (though some are ex-NBA now.)
The truth is that the NBA is changing--bringing in a lot of foreigners who maintain a dual citizenship. The European basketball leagues are getting bigger. When you view the NBA, you can no longer think of it as a bunch of Americans. So the fact that Puerto Rico had a lot of NBA players is NOT self-defeating. It's just a sign that the world is getting better at basketball.