The modern zeitgeist where? The 20th century OTL was more authoritarian in its nondemocratic areas than the 19th.
Touché. I almost responded by saying "You know I mean Europe". But of course, Europe wasn't all that democratic in the 20th century.
So, I will weaken my statement to saying that many people will particularly resent
Papal authoritarianism, taking from the same tradition as Garibaldi. If political ideals evolve in this timeline similar to how they did OTL (certainly not guaranteed), many freedom-loving Catholics would view the Papal States as a stumbling block to their faith.
The following possibilities are what stand out to me, but there could be other interpretations:
1. The pope has a lot of authority. The world tolerates this. -> Catholicism thrives, and there are probably other monarchies in Catholic Europe. The world of 2012 is reminiscent of the world of the 1800s except with airplanes and cable TV.
2. The pope has a lot of authority. The world does not tolerate this. -> The Papal States are considered a backwater. Some subjects love the Pope, but some are actively working to make a revolution. In countries like the US (strong democratic rhetoric plus Protestant majority), there is violence between Catholics and non-Catholics, and Catholics change religions in droves. I wouldn't expect the Papal States to last much longer than about... 1870.
3. Papal States are mostly democratic. -> The world has another delightfully quaint but useless monarch. In the government and military of the Papal States, people with delightfully quaint titles. The Holy See has an even greater diplomatic presence than OTL. There might be a little bit of tension between the Papal States and *Italy, but not enough for war to break out anytime soon. The parliament (or "Collegium Governoratum" if you excuse my bad Latin) would have constant debates over the tension between a "Catholic identity" and the "will of the people".