Location: "We hold these truths to be self-evident..."
Re: Political expansion limits of the Federation
The argument over whether or not the Federation itself constitutes a sovereign state is a function of the fact that the writers' ideas about what the Federation is supposed to be have evolved over time.
I would argue that the preponderance of evidence would indicate that the Federation is a sovereign state, albeit one which delegates greater autonomy to its constituent polities than modern sovereigns do. I outline my thoughts here.
In Star Trek VI, however, the depiction of the Federation takes another step in the direction of "interstellar state," and starts to suggest a pseduo-American allegory. We see the Federation President conducting foreign policy towards the Klingon Empire on behalf of all Federation Member worlds, even negotiating and signing a binding peace treaty. The President is also the target of an assassination plot that the conspirators believe will lead to a war, in parallel with the assassination of the Klingon Chancellor, who is clearly the Klingon head of government. So the implication seems to be that the Federation President is both head of government and head of state.
We also see the President more explicitly being depicted as having complete authority over Starfleet -- proposals are made to the President and not the full Council, further suggesting an American model (since, after all, the US armed forces are under the operation control of the US President and not the US Congress). Still, by this point, there have also been several examples of Starfleet taking orders from the full Council in TNG; this may be seen as contradicting an American model, or, at the very least, as complicating it.
TNG, however, brings us a step further in the direction of "Federation as interstellar state" model when we see that the Federation Council, in "Forces of Nature," has declared a Federation-wide "speed limit" of Warp 5. We have previously seen the Council making decisions that are binding on Starfleet, but, if I recall correctly, this is the first time we see that the Council can make laws that are binding on everyone within the Federation. The legislative nature of the Federation Council is re-enforced with references to the Council debating over whether or not to ratify the Federation-Cardassian Treaty in TNG's "Journey's End;" treaty ratification, in addition to once again establishing the Federation's authority to conduct foreign affairs and making binding law over its Member worlds, treaty ratification is a clear trait of a state's legislature. With these episodes, then, it becomes clear that the Federation Council is a legislature.
DS9 brings us back to a more explicitly American model. In "Homefront"/"Paradise Lost," the Federation Starfleet is once again depicted as answering primarily to the Federation President. When Sisko and Leyton propose an upgrade in Starfleet security and in security on Earth, they propose it to President Jaresh-Inyo, not the full Council. The President is also referred to as being Starfleet's "commander-in-chief," further suggesting an American model. Jaresh-Inyo is also referred to as the "elected President;" this would seem to clearly establish an American model, at least for the Federation Presidency, since the head of government in a parliamentary system is usually appointed from the parliament. (The State of Israel was a brief exception to this rule in the early 21st Century, when the Prime Minister was popularly elected.)
On top of this, the Federation President -- in spite of his not being from Earth -- is clearly depicted as having the authority to place Earth, a Federation Member world, under martial law. This would seem to solidify the Federation-as-interstellar-state model, as opposed to a Federation-as-UN or Federation-as-alliance model; confederations and alliances do not have the authority to place their members under martial law and direct central control, but states do. NATO cannot place France under martial law -- but Great Britain can certainly place England under martial law, and apparently the Federation can place its Members under it, too.
A later DS9 episode, "Extreme Measures," further establishes the existence of a Federation Cabinet. This would seem to be the final nail in the coffin of any view other than that of the Federation as an interstellar state; states have cabinets, alliances do not. This would be compatible with both a parliamentary or American-style presidential system of government, but previous evidence, as I outlined above, indicates an American-influenced model.
"Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic Socialism, as I understand it." - George Orwell, 1946