Yet I've seen the term "British Islands" is used to include the Channel Islands and the Isle of Man, as a concept distinct from the British Isles. For example, on passports issued in Jersey the front states "British Islands - Jersey", as seen in the link below.
Fair enough. I had to look it up but alright. The British Islands refers to the area ruled by Orders in Council (plus the UK) as the islands having their own full independent government system would be unnecessary when all four states are essentially the same and the three crown dependencies are too small to seriously administer separately. Puerto Rico is much bigger than the dependencies. It has a population 37 times bigger than Jersey. I can't see why it would ever need to be administered solely from the UK, especially when the other island dependencies around it are both smaller and far more self-administering.
However, assuming that somehow it became part of the Queen's/King's private territory (say, for example, Queen Elizabeth I takes a personal interest in it for some reason), then could the term "British Islands" be extended to Puerto Rico? That is at least one question I'm asking in the OP, based its use as an extension to include the Crown Dependencies, as mentioned already.
I guess that could technically happen. The question is why would it? It did, after all, never happen IRL. The Isle of Man and the Channel Islands have good reasons for not being colonies which don't apply to Puerto Rico. And then after that, you need to explain why Puerto Rico is being denied the right to be administered on its own island. If you can explain that, I guess you can make Puerto Rico a British Island.
And if Puerto Rico didn't want to join the West Indies Federation in the first place but remain a part of Britain, assuming the Crown Colony/British Overseas Territory scenario? Would it essentially be in a similar position vis-à-vis Bermuda?
Yes it would, except being many times bigger than Bermuda, the UK would be seeking to offload it and make it independent when it jettisoned all the other islands big enough to economically stay afloat without British handouts. You'd have to work really hard to nerf Puerto Rico badly enough that its economy was too weak to ever look after itself. But if you can do that, sure. But even then, Bermuda is a territory, not a crown dependency.
Of course, all of this is reliant on Puerto Rico's change of ownership making absolutely no difference to the course of history. In all likelihood it would change enough that the concept of Crown Dependencies would substantially alter.