To me the kind of monarchy portrayed in Thor is much like the ethics of vigilantism that other superheroes run on. Both are highly idealised and romanticised and would be/are very bad ideas in the real world.
As for peace with the Frost Giants, the idea was that obliteration as not an option, so you either get perpetual war or a peace that is difficult and requires growth beyond the warrior ethic of the Asgardians.