And in OTL there is still notable monarchy restoration movement. Just wondering could Montenegro be in better situation if monarchy would had restored after independence referendum or if Yugoslavia wouldn't had ever created and Montenegro would had remained independent.
Well, the King has some recognition, and he can even sign diplomatic document if the President authorizes him to. It's kinda like Romania, the pretender is still considered as King/Queen, but has no official status. The have as luch power as Queen Elizabeth II when you think about it : they just have to nod their head and they can change the course of events, because people will listen to them.
And about the genral topic, I guess that Montenegro could find some way as a new San Marino, never fighting wars, following it's own policy ... it could be a bit like Japan, becoming a cultural superpower through opening after volunterely secluding for a long time. I a not sure, but the best schemee I see for Montenegro is :
1 : conquering some Yugoslav territories or getting them after independantist revolts, but only on the Ottoman side, by helping people to revolt.
2 : find some way to get Austrian protection by promising to never annex any territory of the Hapsburg Monarchy nor supporting rebels
3 : after WWI (it will probably not butterfly it) when Austria Hungary gets dismantled, Montenegro say that they promised not to take Hapsbug lands, and ask for perpetual neutrality, Hapsburg are welcomed in the country, as well as some German nobility (but not the Royal family, they would go to Netherlands like OTL I guess).
4 : being insanely secluded and create it's own Montenegrin culture that would incorporate Slavic elements from the people, but also German element from the German intelligentsia that arrived with nobility. Then, people would not be interested in joining nor quitting Montenegro, because they are no Yugoslavs anymore but some akward but still pleasant blend.
5 : not siding with anyone, either by Swiss, Swede, or wrapping themselves in a ball way, hoping it will be over soon, while maybe some old Germans would try to extract their friends from Germany if they are threatened by Nazis/Soviets/Allies
6 : being respected as neutral during Yalta
7 : being an open door during Cold War, and therefore quiting it's seclusion.