Designing hierarchies with abstract entities

Could you advise for this design requirement?
Give the user flexibility in creating hierarchies in terms of depth, node placement and arbitrary node names.
They can create labels as they please to group entities.
This hierarchy tree will be used in reporting.
This hierarchy tree will be used to grant security access to the child nodes from a given node.
The shaded nodes in the image are not real entities stored in the database. I am showing a Geography table in the ERDs for reference only.
Would generalizing as follows be an acceptable design?
I understand that this is not a good case for generalizing because there are next to none common attributes among the entities. It will certainly be messy if the client asks for a new entity to be made available for hierarchies in future e.g. Products
which will have their own primary key identity values. Also, if FK/PK relationship is created among entities (e.g. Person/Department) then sooner or later there will be RI issues because the relationship will in two places, i.e. the OrganizationLevel table
and the FK constraint.
What other ways can this requirement be designed?
Thank you!
- Aalamjeet Rangi | (Blog)

Thanks for the inputs David!
You are right that PK/FK among tables or self-referencing keys can be used to define hierarchy. But that is possible only if I know in advance what entities are going to participate in the hierarchy.
The requirement is to create hierarchies that can include a mix of entities, some that will be created on the fly as labels. The hierarchy is going to be used to restrict data access (only children of a given node are visible) and roll-ups in reporting.
I have listed some downsides of design #1 in my question and thinking of using the design #2 as of now. Wondering what are the issues that I should expect with both these designs and if there are any other ways to accomplish this, maybe a completely
flat denormalized table.
- Aalamjeet Rangi | (Blog)

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