I am not sure what you mEditean by theocracy, I would assume confessional state. In which case, it doesn't have to be but I think it (that is an ideal State) is best if it was currently. I need to do more research on the relationship between the secular and religious orders of things in Christian history and politics. I do think they are two powers, although the one represented by the Pope or priest is superior to that represented by the Emperor or king. Often the later has taken the role to enforcing the teaching and ways of the former, for instance executing a person which the Church condemned as a heretic, for such is not the domain of the Church but of the State.
[Note: this is why it is often said "the Church never executed anyone" for it was the domain of the State to execute and the Church to condemn as a heretic, or at least such is what is said to be, I obviously have not read about every case.]
I need to obviously do a lot more research though about the interactions between these powers, Scripture has a lot to say about it and so do many other people up and down the ages including Dante.
As for rejecting the teachings of the Church that is well and fine, tolerating the existence of such communities is a well-attested part of the Tradition although to what extent is another matter, but attempting to force belief or the conscience is indeed wrong to me. I wouldn't call those who do so "free" though. There is some word used in these discussions, I think "liberty" or another to distinguish it from what is seen as true freedom, that is the Lord Jesus.
All in my opinion of course.
That is *so* far away from anything like a society where I would want to live. Looks like a theocracy supporting a totalitarian state.
Yes, liberty works if you prefer that word. Far better than living in such a state.
I tend towards the opinions of Diderot when it comes to priests and kings.
In my mind, this is the *worst* form of society: one where the church condemns and the state executes. That leads to very, very bad places very quickly.
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