What part should the State play in protecting or promoting the Catholic religion ?    Any Catholic who knows that Catholicism is the one true religion of the one true God can only answer that the State, being also a creature of that God, is bound to serve as best it can his one true religion. On the other hand any liberal who believes that the State is incompetent to tell which is the true religion because, for instance, religion is in any case the individual’s business, will answer that the State must protect the right of all its citizens   to practise the religion of their choice, or none at all. Let us look at the Catholic arguments.
Man comes from God. His nature comes from God. Man is by nature social, so his socialness comes from God. But the whole man, not just part of him (First Commandment), owes worship to God. So the socialness of man owes worship to God. But the State is nothing other than the   society formed by the socialness of all its citizens joining together in their   body politic. Therefore the State owes worship to God. But amongst all   different worships necessarily contradicting one another (otherwise they would   not be different), maybe all are more or less false but certainly one alone can be fully true. So if there is such a worship, fully true and recognizable as such, that is the worship which every State, as State, owes to God. But   Catholicism is that worship. Therefore every State, as State, owes Catholic worship to God, including even today’s England or Israel or Saudi Arabia !
But an essential part of worship is to render to God the service of which one is capable. Of what service is the State capable ?  Of great service !  Man being social by nature, his society has a great influence on how he feels, thinks and believes. And a State’s laws have a decisive influence on moulding its citizens’ society. For instance, if abortion or pornography are made legal, many citizens will come to think that there is little or nothing wrong with them. Therefore every State has in principle a duty by its laws to protect and promote Catholic faith and morals.
Such is the clear principle. But does that principle mean that every non-Catholic should be rounded up by the police and burnt at the stake ?  Obviously not, because the purpose of worshipping and serving God is to give him glory and to save souls. But inconsiderate action on the part of the State will have the opposite effect, namely of discrediting Catholicism and alienating souls. Therefore the Church teaches that even a Catholic State has the right to abstain in practice from taking action against a false religion when taking that action would cause a still greater evil, or hinder a greater good. But every State’s duty in principle to protect Catholic faith and morals remains intact.
Does that mean forcing Catholicism on the citizens ?  Not at all, because Catholic   belief is not something that can be forced – “Nobody believes against his will” (St Augustine). What it does mean is that in a Catholic State where taking such   action may or should not be counter-productive, the public practice of all religions other than Catholicism may or should be prohibited.  This logical conclusion was denied by Vatican II, because Vatican II was liberal. Yet it was common practice in Catholic States before the Council, and it will have helped many souls to be saved.
Kyrie eleison.

Catholicism should be the state government of a Catholic nation filled with Catholic people. The days when any nation had a Catholic government or Catholic people are just a dim memory now. I wouldn't trust any reigning government in the world to declare a state religion these days. Even if one government did decide on Catholicism, it would undoubtedly be the phony Conciliar Church that would be foisted upon the population, and real Catholics would be persecuted.

This situation has already been seen in some Latin American countries and in Quebec, where the Conciliar sect is the de facto religion because it is supposedly practiced by the majority and therefore still wields considerable political power, and in those places Traditionalists have been persecuted:  i.e. driven out of their churches and sued in the courts for "illegally" using the word "Catholic" in their church names. Right now Traditionalists constitute a tiny fraction of the world's population, and our situation is most similar to that of the Masses in the catacombs of the Roman Empire. Our political power is less than zero at the present time. Our beliefs are ridiculed and hated and excoriated by 99% of the people and the mass media that controls them.

Theoretically, "every knee should bend" at the mention of Our Lord and Savior's Holy Name and "every living creature should be subject to the Roman Pontiff" but just as in the times of the great Christian martyrs of the First to Fourth Centuries A.D. we are far, far away from seeing those two dictates put into practice.

I consider it to be a veiled blessing that we have freedom of religion in the USA and some other countries right at this moment. At least in those places Catholics can practice their Faith in peace.

St Jude, when the Emperor Constantine adopted Christianity, when Clovis adopted Christianity, were those societies yet Christian?

Caminus has pointed out that St. Thomas Aquinas has said it's a form of sacrilege for believers to be under the rule of unbelievers.

You can be sure that the collapse of the Catholic states (truly Catholic states, not Novus Ordo/masonic states) would not have happened if our non-Catholic government in the USA did not have a great deal to do with it.  Our co-religionists have paid dearly for the strength with which Catholics have supported the US government.  The US government will allow religious freedom at home, (for now) but it has never lifted a finger to help Catholics abroad, in fact it usually does just the opposite.  The fate of Diem is a good example.  Mexico is notorious.  The anti-Franco propaganda was very strong in this country.

In grade school I only ever recall learning about one "martyr" - Oscar Romero.

The NO is a different religion.  

But when you look at the state of the Church in some of the European countries in the last two hundred years it becomes obvious that the Faith was on its way out anyway in those places, with or without our intervention.

There were many many times in the past when people believed Catholicism was on its way out, and it remained.  What happened in Vatican II was something very different than what happened before.  There's no telling how different things would be today if the infiltration and destruction of today's "conciliar church" hadn't happened.

Just out of curiosity, Tele, do you accept John XXIII as a legitimate pontiff?

I doubt he was because he was suspect of heresy.  And he brought back Montini.

And what do you think would have happened if Paul VI had died in say, 1970, and an orthodox prelate would have taken his place? Would that True Pope have been able to undo the damage done by the council?

Or would anybody else like to answer?

He wouldn't have been able to undo all the damage.  Preserve a great deal of what has been destroyed?  Absolutely.

The SSPX, as relatively small as it is, has, until recently, (things have changed pretty quickly in the SSPX over the past few years, even in the couple of years I was there I could sense a change happening) preserved a small but viable community of devout Catholics.

A Church under a strong true Pope would have vastly more people practicing Catholicism than is the case today.