When it comes to space fiction, small scale feudalism almost always make more sense then having a vast democracy/republic/federation of hundreds of worlds spread out across light years. It'd be impossible. Every member world would have a completely different culture and there would be incompatible philosophies and values and needs, not to mention that the bureaucracy of trying to run a galactic nation involving more than a few worlds would be impossible and collapse under its own weight.
In my mind, it'd be more plausible for the galaxy to be made up of many small feudal monarchies, rather than any large empire. Each monarchy would rule their own little locality, tending to their own needs and negotiating with their neighbors as necessary. Maybe a few monarchies would be able to gain control over a handful of planet, but a vast empire of hundreds of worlds would remain impossible. Each monarchy would would probably have have an sovereign who delegates control over individual star systems and planets to lords or appointed governors.
But this is Star Wars and plausibility isn't a concern here. Whatever makes for a more interesting character and moral story is what should be pursued, if we are trying to stay true to spirit of (George Lucas) Star Wars.
Overall, I agree. If there's
one thing that could make
Star Wars more realistic in a 'historical' sense (and without messing with the setting's basic ideas at all), it's this: make galactic unification something intermittent, instead of something that's been the status quo for 25.000 years.
Granted, hyperdrive is absurdly fast. A fleet can effectively cross the whole galaxy in two or weeks. Fast response forces can do it considerably faster. Now keep in mind that historically, empires have usually failed whenever their 'response time' to crises on the periphery exceeded a point between ten and fifteen weeks. This has typically determined the maximum extent of empires (barring temporary and highly expensive occupations of fringe regions). Clearly, in SW, a central authority has the means to operate within that limit. This means that a galactic empire (or a republic) is not impossible.
The unrealistic part is that it lasts so long. But upart from the conceit of the Republic existing for an absurdly long time -- and there being a tech statis issue (as in: technology remains roughly static for many thousands of years) -- I'd say
Star Wars is actually fairly "realistic" in this regard. At least in the old EU. Yes, there is a galactic government, but it's very obvious that it's very minimalist for most of its history. Every single attempt to centralise power is directly tied to a period of instability.
Meanwhile, we
do see all sorts of small monarchies and aristocracies. They appear to run 99% of all their affairs locally, and the Old Republic -- for most of its history -- is more like a confederal league. It's like the Holy Roman Empire in space. The most unrealistic thing is that it's a
Republic, instead of the eminently more credible Empire that one might expect. But given that it started as a sort of compromise between several Core worlds, even that can be forgiven.
But what I'd really expect, and would like to have seen, is a more realistic and 'complex' history of the galaxy. A decentralist 'common order' as the status quo and the most stable situation is quite believable. We also have periods where people fed up with the draw-backs of such a staid, laissez-faire order attempt to impose centralist rule. This always ends in despotism (I have often argued that on a galactic scale, overly centralist rule can only exist as tyranny). This then causes resistance. The problem is that after
that, we always just go back to the "Republic stand-by".
More realistically, you'd expect a few centuries (if not longer) of division, in which competing local powers of varying sizes co-exist. Gradually, they come back together into a new international system, which gradually becomes something very much like the Old Republic that we know, which eventually leads to an aspiring centralist tyrant again... and things repeat.