If you are moving from fuedalism (box set circa 551 MR) to a republic in the current birthright world. I would envision something resembling the French Revolution. Maybe the ideas of enlightement start spreading around. Commoners are getting more educated and a rising middle class starts to have problems with the manorial system. Before long you have a Maximilien Robespierre agitating in Avanil and issuing proscriptions. Commoners adopting a 10 day calandar because they see Haelyn as a tool of the aristocracy, and noble lords being beheaded left and right and their Gold Bars being re-appropraited. This would be a very tumultuous time for the PC's if they are regents as the fires of revolution spread across Anuire. You would in effect be burning Anuire to the ground in order to rebuild it because almost all of the holdings are going to change hands. But hey, it is kind of like clicking the "Godzilla" button over and over again in the old "Sim City" computer games.

Once you have a stable republic, the options are endless. We all know how many ways a Republic can turn into an Empire. We have the example of Rome, even France just 5 years after its revolution, and even the Galactic Empire some long long time ago.