The rest of the population was held in check by fear "of the terrorists" (ex-Separatists, new Rebel Alliance anyone?) Taxes needed to be raised and stormtroopers needed to be stationed in order to maintain domestic security. It's a darn allusion to what is happening in the republic called the USA presently. The Loyalists (rich people not paying the brunt of the taxes, though that's questionable in light of the blockade around Naboo in TPM) had their cake and ate it too by siding with Romney err... I meant Palpatine.
2. An all-powerful, central, unified government is ripe for corruption to grow unchecked. This kind of government is accountable to no one (remember the citizens have been turned into fat, contented cows happily grazing on the government's feet) and can literally get away with whatever it wants. Just think of Nazi Germany, imagine if their had been no Allied forces to confront them and hold them accountable for the Holocaust. If we had had a centralized, all-powerful, one-world government under Adolf Hitler just think of what kind of horrors our entire planet would be living under right now. This is why a unified, one-world government is NEVER, NEVER, NEVER a good idea. Because when that government becomes corrupt (it's not even a question of "if"), then you would actually have to leave the planet to escape the tyranny.
Star Trek has earth in a one-world government. I don't understand the intricacies of it, but I am certain that North America cannot make a treaty with the Klingons and NOT expect that Asia won't go along with it. The Klingons would use any excuse to force total conquest of earth if they could.
A one-world republic government, so long as a constitution saw opposition parties routinely have a voice and share in the power, could work. By extension, so could the Old Republic in Star Wars (and the Federation of Planets as we started talking about Star Trek at my post).
But if one day the United States was attacked by the Klingons because the North Koreans upset them, and the Klingons just said, "What the heck? They are all Terans (earthlings, humans)," that would make us real sorry we didn't have a functional United Nations forum to help coordinate some kind of united policy with the North Koreans.
And that being said, in finality (Deep Space Nine), Terans (United Earth citizens, Federation of Planet peoples) had to have a united alliance with the Klingons to resist The Dominion. And you know - the Founders of the Dominion, with their shape-shifting, might be useful allies against the Borg who probably couldn't assimilate them.
Alliances and the eventual united governments are not stupid things.
Back to Star Wars, the Hutts were not even ever under Imperial jurisdiction - and the Hutt's hold on slavery was a good thing? Really?
He could cloak himself in the Force, reduce his presence. Jedi could do that as well, but it was considered against their principles to always be acting from the shadows. Palpatine was not "super" powerful, nor is any Sith (Yoda said "not MORE powerful").3. Also, if Palpatine was powerful enough to fog the Jedi's minds... every single Jedi, for every waking moment, for over ten years, no matter where they were in the galaxy.... then just imagine what he could do to the minds of normal citizens. I think it's called the Plot-Hole Steamrolling Power of the Dark Side. Which is a pretty convenient power to give your main villain if you want to gloss over the fact that none of your heroes do anything that makes any sense whatsoever.
BigB: you are a trained soldier and pretty strong I imagine. If you needed to, you could cause someone you needed to underestimate YOU by pretending you were scared and needed help to even open a glass bottle. If you had a plan in mind, you could keep this illusion up for however long it was necessary before they'd never suspect it when you turned on them and kicked some serious butt.
Anyway, the Prequel Trilogy was deeper (politically) than the OT and much more sophistocated. Part of Lucas' greed that lent to his shortcomings in writing, was his desire to hook the kids with sillyness like JarJar. He also was not subtle about showing everything "start and end happy" with Gungans and Ewoks. Even AOTC is not "cute," like TPM and ROTJ was a serious departure of tone from ANH and ESB since back in the day. Yub-Nub. Beecheewa-wawaa.