Having read all the postings of Hilton, Barnett, Scruton, Dunn and Leiwen, and the discussion here, I feel that we need to bring the discussion down to earth.
Democracy is based on the idea that sovereign power derives from the will of the people. That is an ideal, and none of the 36 or so designated democracies in the world approach that absolute ideal - they are just more democratic relative to other states. Our own system in the UK falls sadly short of the ideal.
Humans are, unfortunately, derived from chimpanzees, and we have inherited their hierarchical social structure. History shows us that if a single person, usually a male, dominates a hierarchy for more than a few years, he loses his psychological and social bearings, and becomes corrupted by power. There is an arrogance that comes to us when our wishes are untested and unopposed. Evidence for this is widespread, from god-emperors of ancient times through the dictators who project personality cults to the second term difficulties of American Presidents of which George W Bush is the latest example.
In practical terms therefore, democracy is a way of providing the hierarchical system with effective feedback from those at the receiving end of decisions of the president or prime minister.
Democracy is not the only form of such feedback. The UN needs to develop another form of peer-based feedback, to bring pressure for better standards of governance at the international level.
To manage anything we need first to be able to measure it. It is possible to measure governance through a variety of proxies. Free elections, political imprisonment, torture, position of women, freedom of the press can all be measured. Each single measurement might be approximate, but in combination, they could form a reasonably accurate picture of what is going on in a country. In this way, we could find the democratic standing of any state, with respect to its own past performance, and with respect to the community of nations. Such an Index of Human Rights could be a useful tool in bringing continuous pressure against regimes whose democratic credentials are in doubt.