17 Thou shalt not hate thy brother in thine heart: thou shalt in any wise rebuke thy neighbour, and not suffer sin upon him.
18 Thou shalt not avenge, nor bear any grudge against the children of thy people, but thou shalt love thy neighbour as thyself: I am the LORD. Lev. 19:17–18.
As you can see by the language God commands Israel of twelve tribes to love ONLY Israel of twelve tribes. This is extended to the Gentile Church in our present age which began on the Day of Pentecost. God commands His covenant people - Jew and Gentile - to obey His Word when it comes to love. God's love is a Holy love, and He gives His Holy Love to a holy people. God NEVER commanded His holy people in ciovenant with Him to love the unsaved, unholy people of the world. NEVER!
I don't believe your interpretation is correct. If you'll notice when reading the Hebrew text, two different Hebrew words are being used for the term being translated as "neighbour" in the KJV bible. As usual, the king's men were unable to discern the differences between the two Hebrew words. They were unable to decipher anything good within the text (Mat 12:35). The KJV translators were simply displaying their darkened hearts (Mat 12:34), as borne out by your own understanding of how they translated the text.
In Lev 19:17, the term used in the Hebrew text is "עָמִית", and that term means one's associate or companion. The term is used with regards to one's
personal identity/relationship to another person.
However, in Lev 19:18 the Hebrew term being used is "רֵעַ". This term is also a masculine noun that simply means another person in close range. This term is used of one's
spatial proximity to another human being without regards to the type of relationship.
For example, if you or I were to walk into McDonald's to order a hamburger, the person standing next to us inline
becomes our "neighbor", as that term is defined and to be understood in v.18. The idea of "רֵעַ" is one of spatial proximity, and is not limited to "covenant only" relationships as you've indicated. The KJV translation hides this and in so doing they displayed their own unwillingness to love their neighbor as themselves (Mat 12:34). In many ways this is similar to the Levite and Priest who decided to walk on the opposite side of the road while on their way to Jericho to avoid helping the man in need. Sin always has away of manifesting itself and displaying the underlying intents of the heart. The translators of the KJV are no exception here.
A further comparison of the two Hebrew words translated as neighbor in Lev 19:17-18 is further borne out by what Jesus said when being confronted by the Jewish lawyer who asks Jesus to define: "who is my neighbor ?".
And, Jesus answered him accordingly, as shown here:
Luk 10:36 Which now of these three, thinkest thou,
was neighbour unto him that fell among the thieves?
Here, as before, the KJV translators hide the meaning/context of what Jesus said. I'm not sure if they did this intentionally, but they did so none-the-less.
The term the KJV translates as "was" is taken from the Greek word "γεγονεναι". This prolonged primary verb carries the idea of "became" or "caused", not simply "was". The idea here, again, is one of spatial proximity through "becoming" as opposed to a relationship based upon a unique and shared identity, or that being limited to a "covenant only" relationship as you've implied.
If you'll also notice in the Good Samaritan story, the Levite and Priest pass by on the "opposite" side of the road, away from the injured man, not wanting to "become" his neighbor by proximity and to love him as themselves, and as God commanded Israel and Judah to do so in Lev 19:18.
The Levite and Priest walked to the "opposite side" of the road (that is: they changed their spatial/proximity to the man to give themselves an excuse not to help him). They walked according to the flesh (the opposite side of the road, if you will), rather than by spirit and to love him accordingly.
Perhaps the Levite and Priest had better things to do in Jericho than to help a dying man on the road. I'm not sure why they did, but they did so. However, they proved themselves not to "become" a neighbor of the person in need and in so doing they showed themselves to be the heartless enemies of Christ that they were (Mat 25:45). Their sin had found them. They were living according to the flesh.
All men without exception are to be found "in Christ". For we all, and this includes all unbelievers including unbelieving Jews and Gentiles alike, we all live, move and have our being "in Him". That is: "In Christ".
The NT teaches this idea of having a spatial relationship to Christ by using the common preposition "in" (Greek "εν") that is followed by the dative. Examples of this are found in Col 1:16 and Act 17:28 that define a universal relationship of
proximity to Christ for all and without exception. This type of relationship is not limited to "covenant only", as clearly shown here:
Col 1:16
because in him were the all things created, those in the heavens, and those upon the earth, those visible, and those invisible, whether thrones, whether lordships, whether principalities, whether authorities;
all things through him, and for him, have been created,
Act 17:28
for in Him we live, and move, and are; as also certain of your poets have said:
For of Him also we are offspring.
This is the very reason that the term "neighbor" in Lev 19:18 is to be understood as one of spatial proximity and not simply limited to "covenant only" relationships.
Anyway, some of my own observations.