C'thonia on FEI is close to being a theocracy. They're technically a monarchy, but their ruler is a religious nut with delusions of grandeur and a habit of getting in fights he can't win, including invading my duchy more than once -- with my duke having built the largest temple of his religion. Go figure.
That said, I'd be remiss if I didn't try to lure you to Principality of Zonasa. Activity varies, generally it runs in spurts, but if you start something, people will generally respond. It's getting someone to start something that's usually the problem. We are definitely not a theocracy, but there is a lot of opportunity for religious involvement, as I think at least four religions have presences in the realm -- Order of the Elders probably the most (I think Thain doesn't like us because he's jealous of this), but there is a new and fairly active religion, the Church of Echad that might suit you.
We're I think the third largest realm on the FEI, though that's not saying lots, currently involved in a war (at least, probably -- there were some negotiations, but they look like they're falling through).
But for theocracy like realms on FEI, either Arcachon or C'thonia. Currently the most powerful realm on the FEI is trying to destroy Arcachon, and that may be a fun fight, and is slightly an open question still -- they'll probably lose, but if enough other people attack Arcaea, they could pull through. C'thonia is just kinda doomed, they have few nobles and most everyone around them would love an excuse to pound them.
