What you are to do is to write an analysis of something you have noticed in The Tempest. What you analyze is up to you, as long as it is original with you. You are deepening the reading of the play.
Pick anything of interest to you in the book– anything that seems to deserve further research or puzzles you (could be a scene or a line)
Insight of the first intensity is Dr. Nielson’s way of saying, “Show me something new.” Basically, he doesn’t want someone else’s analysis (aka SparkNotes or repeating what academics say). He wants you to come up with your own interpretations of the literature (supported by examples and scholarly journals) that teach him something about the literature he didn’t notice before.
It’s an extremely open-ended paper. I think as long as you have a firm grasp of the play, supply sufficient evidence, and have a unique idea, you will be fine. Things to consider are character portrayals and even religious subtext.