The tale of the dog-king, who took Charles's Isle as his own and was forced into exile, reads almost like a miniature account of a British or French king. The dog-king suffers from the same difficulties managing his subjects as any king does, and is ultimately revolted against in a tiny reenactment of the American revolution, or perhaps simply the Peruvian revolt against their Spanish masters. It is ironic that the Creole adventurer is first given Charles's Isle for helping Peru achieve its independence from the Spanish monarchy, but then is revolted against by the "subjects" he installs on Charles's Isle. The narrator seems to feel some sympathy for the dog-king and his failed ambitions.
The narrator has less sympathy for Oberlus, who, like the Creole adventurer, attempts to become a king of his own island, Hood's Isle. Oberlus's story reads more like a fall from grace into sin. His desire to have control of someone else—Oberlus doesn't just want to be a king, he wants control over another human being—is the point at which Oberlus descends into true evil: "that selfish ambition, or the love of rule for its own sake, far from being the peculiar infirmity of noble minds, is shared by beings which have no mind at all." Despite his stupidity, the narrator says, Oberlus wants to rule someone.
It is significant that Oberlus first tries to kidnap a black slave. It should be remembered that Melville was writing in the 1850s, just a few years before the Civil War, and just a short time before he publishes the much more slavery- related "Benito Cereno" in which a group of slaves revolt against their masters aboard a ship. In Oberlus's case, the first person he tries to gain dominance over is a black slave. There is more irony here: the narrator has already suggested that ruling over another is a "selfish ambition," and presumably a negative thing. But the first person Oberlus tries to control is a slave, who (in the minds of those who own or endorse slaves or slavery) is intended to be ruled by other men. There may be a minor critique of slavery in the story, but with Melville it is always difficult to say anything for certain.
Finally, there is the story of the poor Chola widow, Hunilla. This account, unlike that of the dog-king or Oberlus, does not have any layers of legend. It is most likely drawn from Melville's own experience, or from a first-hand account from someone (it could also be entirely made up, or loosely based on similar incidents). The most tragic scene in this story is Hunilla's cold acceptance of the fact that she must leave almost all of her cute dogs behind her. Few people, it seems, who come in contact with the Encantadas leave with entirely happy memories.