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You would be, for lack of a better term, forced to relocate your game based on the powers of the "owner". Many muds use this type of hierarchy, which as you stated is not exactly a democracy, but certainly alot closer than the broad generalization that has been used so far through the thread.
Since I'm feeling (and somewhat smelling) funky, I'll take a stab at a democratic mud layout.
The Owner has a shell( an account with a hosting service might be the simplest form for the purposes of the setup), creates a game and draws citizens. He has complete power over these citizens ( at least whatever is granted to him by the internal game design) and has the power to bend the world to his vision. At a specified time the Owner position is put up for election where the citizens have the power to re-elect the incumbant or place a citizen into his position.
In the latter case, that citizen is then given the powers of the owner (day-to-day maintanence, shell cost upkeep, everything owners must deal with) and the previous Owner is returned to the citizen populace. The cycle continues.
Would this make for a good game? I really doubt it. Interesting perhaps on a different scale than is combat fun or are the areas good. Not sure if that would qualify as a democratic mud, but it is the closest thing to it I can think of.
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