As I've said in the blog posting you've referenced, Baha'u'llah and Abdu'l-Baha endorsed "render unto Caesar" and the separation of church and state often and emphatically, but most of the early Bahais in the West had the opposite view. In part this was due to a simple mistake. Baha’u’llah and Abdu’l-Baha had advocated a Supreme Tribunal to be composed by the nations of the world, and a Universal House of Justice to be elected by the members of the Bahai National Spiritual Assemblies. When the French translation of
Some Answered Questions was made (by Hippolyte Dreyfus, no relation of the famous Dreyfus in the Dreyfus Affair), he added footnotes where these terms were used, explaining that the Tribunal was the UHJ, and the UHJ the Tribunal. His French translation was then translated in English and German, along with the footnotes, and the book became very influential. His footnotes were corrected in later editions, but the idea was already established by then.
Shoghi Effendi then argued robustly against these already established ideas (among Bahais in the West, not among Persian Bahais). He writes for example that
"Theirs is not the purpose, while endeavoring to conduct and perfect the administrative affairs of their Faith, to violate, under any circumstances, the provisions of their country’s constitution, much less to allow the machinery of their administration to supersede the government of their respective countries,"
and he selected a number of Baha'u'llah's anti-theocratic statements to include in Gleanings from the Writings of Baha'u'llah, which became a very influential book. So there's no doubt that Shoghi Effendi was fully in line with Baha'u'llah and Abdu'l-Baha on this one.
However, this question of the separation of church and state was overshadowed by a much bigger issue that plagued the Bahai communities in the West, and especially in the United States: in Abdu'l-Baha's time a considerable portion of the Bahai communities there envisioned the Bahais Faith as a vague spiritual community or awareness, additional to one's other religious identities. They were critical of organized religion and thought that the world needed another organized religion like a fish needs a submarine. These words, attributed to Abdu'l-Baha in a magazine called "The North Shore Review" (May 16, 1914), pretty much sums up the anti-establishment current in the American Bahai community:
The Bahai Movement is not an organisation. You can never organise the Bahai Cause. The Bahai Movement is the spirit of this age. It is the essence of all the highest ideals of this century.
The Bahai Cause is an inclusive Movement: The teachings of all the religions and societies are found here; the Christians, Jews, Buddhists, Mohammedans, Zoroastrians, Theosophists, Freemasons, Spiritualists, et. al., find their highest aims in this Cause. Even the Socialists and philosophers find their theories fully developed in this Movement.”
These early Bahais had enough of the Bahai Writings to know that Baha'u'llah had written about the "House of Justice" being elected and having authority, but they thought he was talking about a civil government, and the international tribunal, that is, about a body that would rule the secular world and NOT rule religion, because religion needed no organisation. So you see how anti-establishment sentiment and the church&state issue were intertwined. Then Abdu'l-Baha died, and left a Will appointing his grandson Shoghi Effendi as Guardian, meaning head of the Bahai community, and Shoghi Effendi started to roll out the elected Bahai administrative institutions -- already existing in the Middle East -- in the Bahai communities of the West. The anti-establishment Bahais were perplexed, and not a few withdrew from the community, and there were law suits. This was the big issue in the Bahai community in the West: whether and how the community should be organized. Shoghi Effendi was not an American, and never visited America; he did not immediately recognize what the beliefs of Bahais were, but he heard about them through pilgrims who came to Palestine and through letters. In a couple of places he referred to the Bahai Administrative Order (the religious order, not a government system) as theocratic, and a Bahai wrote to him about that term, and the term theophany. A secretary answers on his behalf on 30 September 1949:
He thinks your question is well put: what the Guardian was referring to was the theocratic systems, such as the Catholic Church and the Caliphate, which are not divinely given as systems, but man-made, and yet, being partly derived from the teachings of Christ and Muhammad are in a sense theocracies. The Baha'i theocracy, on the contrary, is both divinely ordained as a system and, of course, based on the teachings of the Prophet Himself.
So the answer refers to the nature not of a Bahai civil government but to the Bahai Administrative Order, which governs the internal affairs of the Bahai community. Shoghi Effendi says that this system of government of the religious community is unlike other “recognized types of theocracy, whether it be the Hebrew Commonwealth, or the various Christian ecclesiastical organizations, or the Imamate or the Caliphate in Islam.” (World Order of Baha’u’llah 152, see also God Passes By 326-7). He is comparing the institutions that govern religious communities in various religions, and the issue is whether and how the Bahai community can be organized. To the Bahais of the time, that was not a rhetorical question. In addition to the "cannot organize" current in the Bahai community, there was a group that accepted organization providing it was a flat organization: a "pure spiritual democracy" without any officers. That idea was completely incompatible with having a hereditary Guardianship, and people called "aghsan" who were descendants of Baha'u'llah. Shoghi Effendi tries to relate the Bahai Administrative Order to systems the Bahais were familiar with, such as aristocracy, democracy and monarchy, and he also uses this term Bahai theocracy, but in none of this discourse is the question "how to organise the state?" It is always about how to organise the Bahai community.
A large enough group of cat lovers (say 99% of the population) could rule the world, working via cute kittens on facebook. What stops the Bahai organisation ruling the world is that its charter, the Bahai scriptures, forbid this. I've already quoted plenty on this issue: see "
much less to allow the machinery of their administration to supersede the government" above. Abdu'l-Baha changed the name of the Houses of Justice to "Spiritual Assemblies" precisely to make it clear that these bodies were not courts or governments. He writes:
The signature of that meeting should be the Spiritual Gathering (House of Spirituality) and the wisdom therein is that hereafter the government should not infer from the term “House of Justice” that a court is signified, that it is connected with political affairs, or that at any time it will interfere with governmental affairs. … (Tablets of Abdu'l-Baha Abbas vol. 1 p. 5)
Peace, unity, equality, prosperity and progress -- and primarily, to establish the awarness of the oneness of humanity in the minds of the masses, and transform their hearts (and our own hearts) to feel it. For the detailed programme, I can refer you again to Peter Terry's overview of the lists of Bahai principles, but for me the essential thing is that no programme at the level of superstructure can have a lasting effect unless it is built on a deeply felt conviction that all humanity is one, the planet is one homeland, and we are all in this together -- so help us God.