The fact that making it a theocracy destroys that capacity.
I really don't like to call it a theocracy, you rather should call it the democracy of that time, but it's a special type of democracy called shura.
I can't think of a single one that wasn't abusive. Can you?
The thing is (trying to get away from politics, here) that the real measure of a movement is what happens when it's in power.
Exactly! What Muslims did when Jews were living with them? they weren't only tolerant, and they didn't only protect them with their lives from internal and external enemies, but they also allowed them to advance in high positions in the government. When it comes to the scholars level, Jews were co-authors with many Muslim scholars and they were sharing knowledge. Then when Spain fell, both, Jews and Muslims fled together from Christian systematic persecution.
what do you call that? something which happened way before developing modern thoughts about tolerance, democracy and equality.