This is mostly a theory about similarities from another book used as inspiration by the writers. Some will surely hate it but hopefully I can at least entertain you all for just a bit and maybe shed some light on things. Here goes:
My theory is that the light or source is sort of like the ring in the Lord of the Rings series from Tolkien. It is extremely powerful and that power is wielded only by the person that has been chosen to protect it. This power gives him authority and dominion over everything on the island. Similar to the ring bearer. This is the power that Mother and Jacob both wield. She wasn't a smoke monster but instead wielded this great power.
Ever wonder why a replacement is needed if the protector is all powerful, never ages and never dies? Well, also similar to the LOTR is the effect that the power has on the protector. Over time it will wear on him/her and he/she will have to find a new person to "bear the ring," before it claims him/her. I think Mother started out her term on the island just like Jacob, as a good person that "didn't even know how to lie." A good soul like Hurley. After a while the power starts to wear her down and possess her more than she possess it. Didn't mother look tired? She was weary from bearing the weight of the "ring." This is why she loved MIB more and didn't recognize Jacob as her true replacement. She was already starting to lean to the dark side.
I also think this is why the new candidate must be a child or good person, one who is free of corruption, just like the Hobbits, who made good ring-bearers because of the amount of time it took for the ring to take affect on them. The goodness in Bilbo and Frodo kept the rings power at bey.
Once Jacob received his blessing from Mother and assumed protectorship of the light, he wielded that power. He was the ring bearer and as such threw his brother down the cave into the light. Since Jacob and MIB can't kill each other MIB's body was still alive when it went down the drain.
Maybe the cave acts as a sort of harvester. As people die their souls must travel to this cave and be judged. If the light in them outweighs the dark then they are granted entrance to the afterlife. If not they are sent to eternal punishment. Either way the light is 'harvested' from their souls and used for new souls reentering the world. The light from the dead fills the Well of Souls for rebirth. If one person dies his light is extracted and mixed with the light in the source. As new souls are needed they simply dip from this light "soup" and fill the new body.
It could be when MIB's live body is sent down the drain that the cave was unable to judge him as he wasn't dead. Instead it separated the light from the darkness and both from the body. And then it kept the light and regurgitated everything else back up through the hole. MIB's dead body is in the cave with Mother, The Smoke Monster is MIB without the light of his soul (his humanity) and his body. He is no longer human but instead pure darkness.
The cave sort of made him into a Gollum. What does Smokey crave? What is his precious? The light. He feeds on it. When new people come to the island he harvests their soul and takes the light. Without it these people cannot enter the judgement and are 'stuck' on the island. They are dead but don't have their 'ticket' to heaven so to speak. We hear them in the forest as whispers.
SO after his huge mistake with his brother our ring-bearer decides that the objective of the job has changed. Mother protected the island from the filthy outsiders but now Jacob must protect the island from the bad outsiders AND protect the good outsiders from the island (Smokey). If he escapes he will harvest the light the only way he can. He will kill people and not just any people, he will kill the good people because the light in them is the strongest. This mirrors Frodo who knows he must protect the ring from men on his journey. But the reason for the journey is to destroy the ring to protect mankind.
Time passes and Jacob starts to look for his replacement. He is growing weary from the weight of the ring. He knows its only a matter of time before Smokey convinces him to listen to the darkness inside of him. He must pass on the power to a good soul. Here's where the trick comes in. Jacob doesn't want to force someone into protecting the island as was the case with him. He wants it to be their choice. He believes it is their fate but he knows they must have the free will to chose that fate. He wants the person to want to make the sacrifice.
So in closing I think there will be only two people left on the island and both will have something to do. Jack and Desmond.
1. Jack will sacrifice himself to be the protector of the island.
2. Desmond will use his special electromagnetic abilities to reunite Smokey's body with his light and his dark sides in the light cave. MIB will be whole again. The Whispers will get their souls back and Jacob will lead them to the light to be judged, some of them going on to the afterlife, some going to eternal punishment.
MIB's super powers will be gone and he will be human. What's more he will be a child again. Back to a time when he was innocent, before Mother started influencing him. Jack being the new protector agrees to let him leave but only if he relinquishes any powers bestowed upon him by his mother. He can leave but he must be fully human with all that it entails. Even death.
The Final Scene:
Jack is sitting on the beach and looking out over the ocean. Desmond approaches in the distance holding the hand of a little boy...dressed in black.
Jack: "Are you sure you don't want to stay for a while? The weather's perfect and I could use the company."
Des: "No We've been here long enough. Thanks Brotha, see you in another life, yeah?"
They board an outrigger and paddle off into the sunset, Desmond telling the little boy all about the "many things across the sea."
This is mostly just conjecture and chock full of holes, of course, but hopefully you were at least entertained by the read. Thanks for letting me waste your time.