but it also gives the moral hazard of someone wanting to start such a regime, because they know they can profit/garner personal wealth during their reign, then beg for amnesty after a while (when it looks like their grip on power is lowered), and possibly, hiding their wealth gained away somewhere secret.

Where as, in a world where such amnesty doesn't exist, they may have to face the possibility of being executed when they lose power (which, if history is to be believed, they eventually do). Therefore, some who are more cowards but cunning won't want to be a dictator, and thus, you end up with a more democratic system.