The troubles in Iran got me thinking about the difficulties inherent in having theocracy as a nation's governmental form. The most obvious difficulty is in allowing religious plurality.
Beyond protecting the rights of those not affiliated with the governing religion, theocracy has another major difficulty. People often criticize their government. However, when you criticize a religious government you appear to criticize God, or his/her designated representatives. Faiths get very touchy about allowing criticism of their leaders.
Iran will have to suffer seeming apostasy to get from where they are now to become a state in which religion and government operate separately.