Your prescious Barons were appointed from a group of incompetents fleeing a city they had just screwed over by quitting on it.
The 7 or so Barons you had at that time was obviously trying to make up with quantity what they could not find in quantity.
As for Panaidos, he won by a contest, just like a democratic election.
The only difference is that his election was decided on his own cunning, ability to fight, and knowledge of Avalon.
Seeing as Democracy is usually the last system of government before self destruction (see also Athens), the excess of morons voting for morons in Mercinae seems quite appropriate.
Nothing but love for ya,