My 2 paisa - (do excuse the inadequate writing skills)

I guess the current scenario in 'secular' countries / democracies - where there is a 'separation of religion and state' derives itself from reactions to the huge power religion has historically had in governance. In particular, the American democratic principles put together by protestant communities which fled to the u.s. escaping oppression (including political oppression) by the catholic church. Also the reaction by the academic field, keeping in mind the onslaught on 'modern (western) scientific thought' through the dark ages, etc...
In the larger history of civilization, it seems the 'holy' word, has been used consistently and repeatedly for exploitative advantage, if not to justify and perpetuate horrendous atrocities.

The fact seems to be - that religion plays a huge role in governance. In the context of secular countries - It could be indirectly through ethics, entire frameworks of knowledge which derive from it or are couched in it, cultural practises, etc...
or directly through involvement of religious institutions supporting political parties who favour their interests and through political parties mobilizing the 'religion' vote.

The question is - How can one be inclusive of the 'religious vote' yet have checks and balances on religious vote banks' and religious institutions' overawing power to dominate political choice, invalidate other viewpoints, and oppress minorities. Currently, in countries like India or the U.S., we seem to have a delicate balance where the church, temple, mosque,and so on is limited from 'standing' for election, but such religious institutions can spawn political institutions and through them or through support for political candidates, can participate in the electoral process. The case of how the Sangh parivar has exploited religous allegiances to get its vote is very interesting considering its atheistic beginnings and its foundations in nationalism (of sorts) rather than religion. In India, it was heartening to see how the rural vote in many states, disillusioned and distrustful of the religious rhetoric of the party in power - the BJP, opted to ignore the religious rhetoric and voted on economics rather than religion. On the other hand, one can go down the route of some of the Islamic republics, and through a long drawn out process involving great pain inflicted on society, watch as history repeats itself - the coming to power of religion and the hope which goes along with change, then its dominance of the political, bureaucratic and legal systems, oppression, and finally disillusionment of people with the system in power (which may happen to be a religious system, but could as well be some other enforced or dogmatic ideology)- and then the struggle by people to relax its by-then entrenched grip on governance representing vested interests at all levels of society.
In such a context, I think the current 'separation of religion and state' is an imperfect, but lesser of evils kind of thing.
I do however feel that the intellectual arrogance and 'snootiness' which relegates religion 'to the masses', invalidates it and excludes 'religious' perspectives from academic and public debate definitely needs to be questioned and addressed.
Ofcourse, all this in the caveat that the word 'religion' is an over-generalization by itself - it lumps together numerous diverse lines of thought and experimentation as one entity. There's a problem and limitation of language here itself, and its difficult to proceed in the debate in such a context.

On another note, I feel an equally pressing question is how can one have more checks and balances on protection of minority interests in democracies. The problem of religion in governance, includes within it, the problem of suppression of minorities. But democracy itself is to evolve beyond its limitation of collapsing into a mobocracy. How can the democratic system be changed to allow for more protection of minorities with little or no voice? Taking this point a step further, how can it be expanded to allow for consideration of citizens of our planet that do not have a voice at all- eg. future generations which have to suffer the excesses of the current populace, or non-human species including forests and animals, consideration for the earth and its environment at large, etc...

I often wonder, if problems such as these can also be seen as problems of scale. ie - Beyond a certain scale (of size), they do not have solutions. But that in smaller scale scenarios, reasonable processes to restore equity and balance can emerge.

Complex issues - as they say - wheels within wheels.