If your analysis of Mark's political Weltanschaung is correct, then he is no different than many ultra-conservative Catholics who (like Buchanan) effectively decry modern civilization in favor of a quasi-medieval model in which the Church, aided by an allegedly benevolent government, had near-totalitarian control over everybody's lives.
I don't think that this description of the Middle Ages is at all true, for the simple fact that totalitarianism was very much a late nineteenth and early twentieth century innovation. Technology (particularly the ability to send and receive information) has done wonders as far as extending the power of the state and there is no way that any monarch from Charlemagne to Napoleon could achieve such feats as those of East Germany where roughly 20% of the population was under surveillance at any given time.
Secondly, I don't think that applying that any kind of totalitarian model to Mark is at all fair to him. For all of his criticism of the modern form of liberal democracy that he believes is run by millionnaires, he retains a very proud view of the Founding Fathers and the United States in general up until about the time that the Baby Boomers gained control of the state. He hasn't ever exactly explained how our political system is to be freed from the grips of the oligarchs (and I don't think that being ruled by oligarchs is necessarily inconsistent with having a society in synch with Catholic teaching, otherwise a lot of medieval Italian city-states are going to get disqualified) but then the practical policy consequences of some of Mark's nuttier ideas have never exactly been at the forefront of his jeremiads. My guess is that he favors some kind of system that "gets money out of politics," which is one of the reasons that I have always been curious concerning his view of the campaign finance reform laws.
On the argument that theocracy is the only legitimate form of government, I would just link to this Orthodox defense of sacred monarchy. I think that the Catechism takes the wisest approach to the issue of government with its emphasis on justice and the common good rather than on the particular forms of government.