Yes, you can challenge police actions in courthouses. It happens all the time in most countries i know of. You can also protest on public forums (equivalent to player talk), but those protests are less effective if you don't have an independent court system. In fact police actions must be validated on courthouses, by judges.You said "Law enforcement should be kept to deal with just a few cases most players know about.". And that's what I responded to with my first sentence.
You can respond to GM actions. Just because you often have to do it in a different forum doesn't mean you're prevented from doing so. Do you complain about police actions in a court of law? Or do you talk about it in public forums and write to the people who make the laws? The former is the equivalent of the Court House forum, the latter is more like Player Talk.
Courthouses monitor police work in most (if not all) democratic countries. That idea of separating powers comes from both the french revolution and american independence war. The idea is not having ALL the power in the same handsDo you yourself tell the police what they should and shouldn't do? Or do you let the powers that be say what they should and shouldn't do? (Assuming you aren't one of the powers that be where you live).
In this paragraph you've portrayed yourself. GM's should do what they want, when they want and there should be no complaints about it. Of course you can talk about it, but you won't be listened to. Your analogy is also incorrect, let me tell you why:GMs shouldn't work for the whims of players, but enforce the rules as set by the server administration. That role will become more defined and kept to by the GMs. If you don't like the rules, you can go play elsewhere.
In any modern political system, people that make the rules are not the same ones that enforce them. You've mentioned the police. The police don't make the laws, the parliament does. And parliament members are elected. Legislative chamber makes the law, judges choose how it must be applied, policemen finally take action.
So, you tell me that GM's must decide the laws, judge, and apply them. All the power in their hands. It sounds to me like some kind of dictatorship, to continue with your analogy. Maybe I can't make you understand the importance of public control on law making and enforcement. But it is important.
If all the power is in the same hands, there will be abuses. There won't be any way to prevent them. It won't matter at all if the ones chosen to be the legislator-judge-police power are reasonable people.