That's pretty much what I meant. Maybe sometime in the future (5th era?) the empire through some series of event became a republic. So I believe right now it won't work since like you said. I doubt the mede family would not give up their power.
You're underestimating the power of the mystical here, as well as the power of the Gods. Given times things can change, but I doubt they would change as much as you suggest here. I'll try to explain by going into each race with a bit more debt.
Orcs - They worship Malacath, their patron God. Malacath as a god can directly intervene and would need his people to remain relatively the same. Orcs can therefor never change for they would be fighting against a Daedric prince.
Skyrim - The High King and the Jarls have power, that seems to be more political and not even bound by blood, which definitely weakens the position of the Jarls. The High King however undeniably has power, for a king should only have to point at prophecies to say a king is needed. The basic society of Nords also worships combat, glory and honor. Their entire wish to go to Sovngarde upon death is a great example. Any society like that will always place warriors and wars first, democracies in their very nature limit that ability and any Nord that becomes powerful could challenge a Jarl or High King for power. Only if their entire society changes will this change, but I don't see why it would.
Spoiler The bloodline thing can be seen in the civil war where new jarls are appointed by the day
Morrowind - The Great houses, the Dukes and the Tribunal used to be in control. With the fall of Dagoth Ur and the Tribunal however there was a great shift in balance. It appears that Helseth took power primarily by his allignment with the Empire. The current state of Morrowind is completely unknown however, but reason would suggest that the Great Houses themselves still have the most power in Morrowind. The death of Helseth is in my opinion more likely to revert them back to Great House rule then anything else. Especially considering all the horrible things that have happened since Helseth took power. The failure of the Empire to protect them will likely also play a role here.
Morrowind with it great house structure also seems unlikely to become more democratic, a republic seems near impossible. Though perhaps a rule between the five houses who vote on every issue is a possibility.
Black Marsh - The hist rules, the gods of the Argonians in the end decide what will happen to the country, all Argonians know and accept this, this will not change.
Elsweyr - The Khajiit are a divided people, different believes different creations, they share a few similiarities in that all worship the moons and consider Azura their most important goddess. Shallowly they would be good candidates, but I doubt they will ever change considering the fact that their entire life depends on the stance of the moons when they are born. They are sort of forced into a role, and I personally would assume that this prevents any kind of real equality. Not every Khajiit is as suited for a job as the next.
Summerset - A candidate as good as any, we see the Thalmor a relatively powerful but minor political group has taken power through popular support after the Oblivion crisis, and they have done a lot of racial cleansing after that. Theoratically this could be a breeding stone for democracy. The problem however lies in the way Altmer generally see their society their relatively long lives and the importance of magic in their world. Powerful mages will likely always be more respected then others, and this prevents any real democracy. It's also unlikely that anybody with real power would ever change their own rule into a democracy without popular outcry.
I admit that I don't know enough about the other nations to be entirely sure, but on a guess.
High Rock - To many near independant city states, united in a Kingdom primarily through a strange occurance. High Rock seems an unlikely candidate, they still have powerful and by all that I have seen popular royal families.
Valenwood - I think the Silvenar is magically appointed, but I'm not sure. Regardless the power lies there, religion won't allow that to change.
Hammerfell - No idea really.