Dume is an unelected ruler, who has been at his position for thousands of years with no known term limit. Dume announces the news himself, with apparently no other journalist media present. He also has direct control over what goes in the archives and what doesn't, as well as what is closed to pubic access. The Matorans' employement opportunities are devided based on gender and colour. Though money is used, everyone happens to be more or less equally wealthy.
# quote end
First off, this is based on human standards for totalitarianism. It is not exactly applicable to biomechanical beings in a giant robot. For one thing, the money is a non-vital component of their existence, and was probably handed in rough proportion to how much they worked, and since Matoran are forced to work a certain number of hours by the Vahki anyway, they had a certain amount of money that was about the same.
For another, the small size of the city and the technology in it (Vahki) probably eliminated the need for media coverage.
Third, somebody would have to decide the Archives bit, and probably someone who knew how dangerous such Rahi could be, where to put them, etc. Dume may have had some knowledge about this from fighting them as a Toa, and he probably would have consulted the Chief Archivist in dealing with this.
Fourth, the Great Beings designed each type of Matoran for specific jobs. They would have done those jobs whether Dume was the leader or somebody else was. In fact, they did do those jobs under a different Turaga-leader; we just don't know who he is. Mata Nui is the real leader; Dume is just his proxy.
The most valued workers, like Vakama, are the ones who are fiercely loyal to the system and long to reconstruct it even after it crumbled because its infrastructure was breached almost effortlessly by one person.
# quote end
That person was a colossal monster and mastermind with 42 kraata powers. And breaching the system did get him protocaged and then killed. I would not call that "effortlessly."
Further, Vakama and the others did not try to rebuild that infrastructure (immediately)- they ran off to Mata Nui Island. Vakama came back to Metru Nui just to shove the whole thing in Makuta's face and show him that he couldn't take Metru Nui away from him. And also because Mata Nui needed them there - they probably figured that out during the Matoran civil war.
Everyone shares the same belief in the same great spirit and dedicate their lives to his will.
# quote end
Correct. I agree with this.
Anyone who is abnormal (like Takua) is looked down on and frequently arrested.
# quote end
Frequently arrested? More like dragged back to his workplace after taking an unscheduled vacation.
Those, like Ehrye, who aspire to move up to better careers are unable to for thousands of years.
# quote end
Ehrye's lack of promotion is due his lack of responsibility, not opportunities for advancement. Vakama moved up from a toolmaker to mask maker. Nuju was mentored by Ihu.
The society has existed in this format since the end of the civil war, and has (as far as we've ever been shown in the story) gone, at least publicly, unchallenged.
Either Metru Nui is a place where, conveniently, everyone believes the same things and have dreams and aspirations which agree with the mooth-running society, or Metru-Nui's government has a darker side than we've been shown.
# quote end
Everyone shares the same belief in the same great spirit and dedicate their lives to his will.
# quote end
I'm going with the former. Although, as the Iron Toa said, there were things like smuggling rings.
That said, Bionicle is a story for kids. It wouldn't surprise me at all if the solution was, in fact, that everything's hunkey-dory and everyone agrees on what's right and wrong. If it just so happens that every Ta-Matoran's dream is to be a crafter, and every Onu-Matoran loves being an archivist, that's because it's a kids' story which isn't about political strife. It's about good guys fighting bad guys with mask powers.
# quote end
That might be part of the reason, but I think the main reason is that
Everyone shares the same belief in the same great spirit and dedicate their lives to his will.
#quote end
because he is responsible for their very existence. They will do anything to help him because if he crashes, they crash. If he burns, they burn. It's like on a spaceship. It is extremely unlikely that anyone will question the captain of the ship when you are about to be burned up by the Horsehead Nebula.
Or any other time, for that matter. Disobeying orders hurts everyone on the ship, including you. Obviously there were a couple objecters due to the mysterious nature of the thing, but for the most part everyone did what they were told.
After all, Metru Nui has no military. It hasn't needed one. Almost every threat it has faced has been beaten by a Team of Toa, a Vakhi squad, or a rag-tag group of unlikely heroes.
# quote end
I agree with this. But it doesn't trivialize the threats the Matoran faced (which I think you may be saying). After all, there were eleven toa on call to defeat the Kanohi Dragon, a few hundred for the Dark Hunters - and Toa are a force to be reckoned with.
Vahki, okay. But they weren't really all that helpful - they got smashed frequently. 
And the next time I run into an unquestionably evil bad guy, I want to hire the "rag-tag group of unlikely heroes." In lots of stories I read, they always seem to come out on top.
Contrary to the film, Legends of Metru Nui, there are only about a thousand permanent residents in Metru Nui. They probably don't need a structured government the way a country of millions does. As long as Dume listens to people's greivances and resolves conflicts with sporting events, everyone (with their conveniently idealogical agreement) should be happy.
# quote end
Resolves conflicts with sporting events? I thought only Makuta did that. 
If you asked Greg, I bet he'd answer something like that. That the story is for kids, and it's not about matoran politics, and you should just enjoy it for being a fun adventure.
# quote end
I agree with this.
Unfortunately, the everything-just-happens-to-work-smoothly theory leaves the Bionicle story as a whole, with that major weakness. For us, the fandom, who take it all way too seriously, because we're geeks and we like to, this theory strains our suspension of disbelief. In real life, people don't agree. In real life, people have different values, different beleifs, different lifestyles, different ideals. In real life, no society could possibly work the way Metru-Nui does, and so we are always left with the conundrum that either Metru Nui is a politically extremist totalitarian regime and no one seems to mind, or that the Bionicle story takes place in a universe that just doesn't have the depth to cover much more than action, adventure and cool superpowers, that good and evil are divided by mickey mouse morals, and that the only people who aren't completely content with their role in society happen to be the ones with monstrous features and violent personalities.
# quote end
And this is not real life.
At least, not real life as "people who live on a big planet who have been separated for thousands of years and developed independent cultures" type of real life.
More like the type of people who wake up on a spaceship with no memories. They learn that their spaceship (the Mata Nui robot) is controlled by Mata Nui. Serve him or die. In fact, they learn that they have been doing this unwittingly for years. That Matoran who don't do their jobs are sent to Karzanhi. They don't have a choice. They do their work.
I submit that was the way it once was in our world too, once. We were once under kings and queens and all that. The people under them didn't have a choice. They did their work. It's only later did people realize that they had choices, whether to stay in England or sail to America, whether to fight in a war or stay home, whether to elect leaders or have a king.
But there was no way out of the robot - even if there was, they didn't even know there was one. They didn't know that there was a whole world out there. They even tried not doing their work once - the Matoran civil war. Mata Nui fell ill, and Makuta Teridax's painful punishment for the combatants probably convinced them - work or get hurt. Mata Nui wasn't putting up with slackers. He's the real government.
Now, on SM, the Matoran have choices. But in Metru Nui, no. We are so used to having choices that we forget that we didn't have them at one point. And we still won't have them in the future when we're on a spaceship. (Oddly enough, people like that stuff...
)