Creating a Democratic State. Instituting A Constitutional Monarchy

If you wished to create a just and stable democratic state that effectively manages conflict, what blend of characteristics would it have?
I sat here thinking, if I was in president Bush's position what would I do with Iraq or any other new area of the world when deciding to instatute a new country or new government. The major thing before deciding on a form of government for any State that the creators need to address is the religion of its inhabitants. Since the world houses about 2.14 Billion Christian's, (Adherents.com), which makes up 1/3 of the population of the planet.
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