SteveVH,
I certainly agree that God intends for there to be “an holy nation” that crosses national boundaries and unites people everywhere on the earth. I hope that happens in our lifetime. I assure you that it will not be under the banner you suggested, or the earth would already be in the Millenium having had 2,000 years to get there under the leadership of Christ and the Holy Spirit as you suggested, with the fruits of the gospel fully present in every Catholic’s life on earth, and poverty completely done away with among the people of that “nation” you perceive to exist. It will be a wider coverage than that, when He comes and reigns.
Jesus was speaking to the Jews, and knew of course exactly what they were expecting regarding a “nation”, and it had to do with them–a political body as well as a religious body of supposedly “covenant people.” I agree, however, that they were to have been a “kingdom of priests” if they had lived by the covenant God intended them to have made through Moses.