I could see "God-King" as a necessary innovation in an area where the mere fact of establishing some kind of order couldn't be taken for granted; combining the social control of force/police and religion could make fairly lawless areas functional without the need for an oppressive police presence that may not be possible to create. The theocratic side encourages people to internalize controls, so fewer police are needed. Therefore, theocratic monarchy would work as a stopgap, allowing some order to develop into some more functional system that takes better advantage of the talents of its members.
When you look at history, it is amazing how little rulers knew about the areas they ostensibly governed. To know what you have, you need to gather lots of information and keep track of it. Any effective government will, in the end, require a bureacracy that itself will become a power base (whether courtiers, technocrats, or lobbyists are the label you give them). The greater the scale of the government, the more top-heavy things tend to get, unless one explicitly maintains some local control or communications and transportation technologies prevents effective rule over distances.
As for my personal preferences: decisions should be made on the lowest possible level for effective decision making, and hereditary power tends to breed corruption and injustice. Modern federal democracies come closest to that ideal in practice (of course, I'm not a big fan of efficiency in government, since efficiency so easily turns to tyranny).