I think Fr. Palau's description of the "two horns" is a variation on the same beasts described in Apocalypse 13. The Beast from the Sea is the temporal power of the Church, the papacy itself. The Beast from the Earth represents the moral authority of the Church's ministers. Both will be used by Satan to kill souls.
But the main focus after the mention of the "two horns" is on the temporal power of the Church (the 7 Hills that dominate Rome). Those 7 hills represent the 7 papal regimes that the Apocalypse is referring to.
In those 7 papal regimes, Fr. Palau says, are "fortified by princes of darkness which are subordinated to the Dragon." The "Princes" are the princes of the Church, the Cardinals, who are actually agents of Satan manipulating the Curial machine to move things along as Satan prefers.
So, the vision is a vision of the future, after 1929. It is not a vision of the Church in Pius IX's time. It is an end times prophecy picking up where the Apocalypse picks up, with the 1st head of the Beast, that is, the Vatican in 1929. It is not Pius XI himself in 1929 that is the main problem. But the Cardinals running the show behind his back are the problem.
The Princes (Cardinals) say they "already possess the crowns of all the grandees of the earth." The grandees are the bishops of the Church. The Dioceses of the Roman Catholic Church cover every inch of ground on the planet. These Princes (Cardinals), who actually will control the Vatican (with the Pope as a mere figurehead), are saying that they control the Bishops as well. Why? Because the Bishops are appointed by the Vatican Curia with the Pope's signature.
But they say they only "lack this one," i.e., they don't control the Pope himself yet. He is referred to as "the temporal power" but that is simply another name of the Vicar of Christ on Earth. The Pope is "the temporal power" in this context. It is not referring to the Papal States issue at all. They are complaining that although they control the Curia, they do not yet have one of their own in the Papacy itself.
That is what finally happens AFTER the 7th Head of the Beast is removed. Then the Cardinals/Princes have one of their own in the papacy as an Antipope. That is what happened with Bergoglio. That is the essence of the Fourth Beast which Daniel says is different from the other beasts that he described. It is why the "eighth" is not described as an actual head but rather "of the seven" or "like the seven." [Apoc. 17]
And by the way, the Pike docuмent explains the exact same strategy. To put one who agrees with the Freemasonic vision in the Papacy. That is their goal because as Fr. Palau says, that is Satan's goal.