How so G? As far as I can see it would be a Fascist state but with divine backing, making all opposition 'evil'.
All opposition to the state as a state is always evil. The state never tolerates anarchists or effective reformers.
Fascism is a specific system of political economy. It gets used to mean "bad government" but it is actually something well defined which does not necessarily have anything to do with theocracy in particular. Note, Hitler and Mussolini came to power as fascists via democracy. America has a very fascistic economy and it is a constitutional republic.
I think a theocracy, depending on the religion, and how strictly the religion is enforced, could be much better than secular democracy, which is essentially amoral.
In a secular democracy, there are no morals, except that the state is always right. In a theocracy, there is rule by moral right, which might be at times barbaric and backwards, but the laws are consistent with that moral ethic. Politicians are confined to acting within the moral rules, not the whims of the voters or the money of special interests. Right and wrong are defined absolutely.
As an aside, just as the Muslims have no right to impose Sharia law on you, you have no right to impose western secular ethics on them. If you insist your morals are superior, they can also make the same claim. These are value judgments, subjective and individual.
You gotta remember, when the Danes were burning women at the stake as witches, Muslims already had 900 years of women having a right to inheritance, initiate divorce and to conduct business as private property owners.
I am not defending Islam or attacking any other religious ideal. My ethics are such that all aggression is wrong, whether it is attacking Iran to prevent them from building a bomb (or really, to protect oil interests) or attacking them to overthrow their government and way of life (apparently nothing was learned from the Islamic Revolution against the Shah and western values).
Live and let live. The Persians by and large are quite charming people.