If I understood what you want, the following code should do the trick:
(around LaTeX-env-item-region activate)
"When there is an active region, wrap the environment around it.
Insert \\item macros at the beginning of every non empty line of the region."
(let ((beg (min (point) (mark)))
(if (< (point) (mark))
(while (re-search-backward "^\\(.+\\)$" beg t)
(replace-match "\\\\item \\1" t nil)
;; Remove the extra \item.
(re-search-forward "\\\\item " (save-excursion (end-of-line)) t)
This works with all environments inserted with
theindex by default.