Well, the simple reason is that anarchy already happened.
When 80% of the realm secedes, you're down to three nobles, and you're having periodic starvation, it's anarchy in all but name. I don't see why it should be necessary for me to step down. We've already done the anarchy thing. Plus, if anarchy does happen, the peasants will get pissy, and the last region may revolt, so I can't really step down. But theocracy won't piss of the peasants, who are majority Sanguis Astroism anyways. It's just anarchy that would mess up the peasants.
Plus, my prestige is low-ish after lots of tortures. If I step down, I could be close to the range of being ineligible: which makes no sense, because proclaiming a theocracy should increase Hireshmont's prestige, not decrease it, as it increases his personal sway and power.
In sum, the dynamics of anarchy mean that transition wouldn't be very possible, and, furthermore, would contradict plenty of standing RP.
My understanding of Tom's e-mail (I guess I misread) was that he was suggesting that a dev do it, not so much that it's unclear if it should happen or not.