Sheridan could have dismantled the Psi-Corps back when he had umpteen-million guns pointing at Earth. He should have done this, in fact. He should have had the Rangers occupt the planet and put in place a de-clarkification program that would lead to the fair trials and speedy executions of practically every elected official and bureaucrat in the EA and then rebuilt the government from the ground up with a better respect for human rights.
I have to disagree strongly on this part, though. If foreign nations invade someone's country, execute all its leaders (of all things!) and occupy the place, no-one will shrug it off happily as necessary and "for the greater good". They'll be angry, outraged, humiliated, and quite rightly.
Really, violence between countries is a lot like violence between spouses. If you just beat the crap out of your spouse and then leave him or her lying on the floor then you're an evil bastard who will be demonized. But if you help your spouse up, offer a reconciliation gift, and say that you're sorry that s/he made you do it, then your spouse will love you all the more and try not to do whatever bad thing provoked your rage again. Battered person syndrome is all about inducing a state of self-loathing in which the target of the abuse believes that it is all their fault. The same thing can be done on a national scale with a little bit of effort and some very big guns.
Oh, of course, if that's the winner's desire. But the desire here was to liberate Earth, not oppress it under the weight of "all your fault, now be sorry and, oh, you're joining Minbar's new alliance whether you really want to or not". And I still don't think it could work on a planetary scale. To impose on Earth would lead to bitterness, resentment- people don't like having their destinies dictated to them by outsiders, or those they perceive as such. Look at the trouble Earth had with Mars. The IA would have had the exact same trouble with Earth if they had occupied it or tried to force themselves upon it. And I seriously doubt the humans would be happy with the idea of Minbari oversight when the Minbari tried to wipe them out only 15 years before (and they'd view it simply as Minbar giving the orders, whatever the reality). If Sheridan had tried to impose anything upon Earth following Clark's, er, removal, the humans would have resented it for decades, if not longer. It wouldn't be "the liberation" and a chance to embrace a new position in the IA, just a humilating defeat and Earth would simmer for a long, long time. And marginalizing the Earth-firsters would probably be quite difficult in that atmosphere. Not to mention certain non-human people who would take advantage of any resentment to deliberately stir up trouble and cause problems for the alliance.
Well, that's how I see it.

			
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. It could well have been a "golden age" in the end, that eventually slipped back into old habits due to- well, who knows what happened in the end to set off the "Let's play Orwell" politics? 400 years is- if you'll excuse me saying the blindingly obvious 
- a long time in politics. And we saw that 100 years down the line, the humans have already totally rewritten Sheridan's life and actions as they see fit. I don't really think it matters what someone did 400 years ago. 10, 20, 30, yes, as we've both acknowledged, but 400? Sheridan is just a name and a historical idea (or ideas) by then, I imagine.
		
 At least I finally got to see the Drazi homeworld, that was nice. The Drazi are fun, I didn't think they were going to be such a big deal when they first appeared, but now they're possibly my favourite alien race on the show. The idea that they design their streets to be small so that they're difficult to invade is interesting, but how did they commute before the invention of the hover-car?