Considering the evidence provided by other devs that the religious structure as it is currently is meant to be dictatorial,
This is quite true, so far as it goes. Religions are essentially guilds with the added restriction that you can only belong to one. Guilds are intended to be dictatorial, in that those at the top have complete control over what transpires inside the guild. Given the limited scope and power of guilds, this is acceptable.
However, when religion was added, and for quite some time afterward, no consideration was given to the possibility of the sheer amount of power and influence that a religion can amass. If a guild falls or is taken over, does it really matter? You can easily start a new one. It can be a bit of a pain to rebuild your guildhouses and regain your membership, but nothing substantial is lost. (Maybe some gold, but the peasants will quickly replenish that for you.) Besides, guilds really don't inspire the kind of the ambition and power struggles that religions do.
Religions are a different matter. The concentration of power and wealth, expensive infrastructure, extensive character RPs, not to mention the peasant following, represents a significant investment on the part of many, many players. As the organization gets larger, the investment can increase by orders of magnitude. The concentration of wealth/power/influence makes religions an unprecedented target far beyond the scale that was ever envisioned for the simplistic guild-based system. This calls for a stronger coding infrastructure to support the system. Frankly, I consider the failure to provide this to be a failing on the part of the dev team (myself included).
The dev team considers the feasibility of having larger religions to be a desirable thing. Not only larger, but more varied, as well. Large religions allow for large concentrations of power, which allow for many opportunities to create fun situations for the players. The dev team needs to provide the players the tools to do this. We are discussing various proposals to add checks and balances to the system, similar to the way that the realm power structures have checks and balances to the system. Several proposals have been made, but no final decisions have been reached.
If we can find a way to provide systems for religions to be as widely varied as realm governments currently are, that would be of great benefit to the game overall, and the religion game in particular. It should be possible to provide for all types of systems, from the current tyranny style all the way to republican styles, and everything in between. However, the Prophet/Founder rank will always remain at the top of the religion, with full control over everything.
and the Elders gave power to what many people considered an unknown
This is so untrue as to be laughable. You know nothing of the events and circumstances that lead to the current situation. Your characters haven't been a member of the religion for quite a long time. And for a significant portion of that time,
you didn't even have a game account.
