I find the idea of making them non-Hawaiian so odd? I guess it's not necessary to the story, but it seems to rather transplant it?
I don't personally mind about the casting of the Little Mermaid and it's quite a reasonable approach to that particular story. But I also understand why someone might feel that a film like that should reflect the place the story came from. And the fact is that is rigorously enforced in certain cases with non-white roles, so I can see why they feel there is something of a double standard.
Something like Lord of the Rings, on the other hand, was very deeply tied to a particular culture and its history and literature. It was meant to be a kind of myth specifically tied to European models and especially to England, and Tolkien had a deep history of the place which the stories reflect, they are connected to real elements of history and languages too. He spent a lot of time creating a world with a kind of coherence, ideologically and otherwise.
People who claim that it's just all made up and so sex, what people look like, etc, do not matter, clearly don't understand what the books were about, or for.If you want a differernt kind of story they should bloody well write it themselves, or choose one of the other thousands that have already been published.