The creators really indicated that Wu would step down from power to establish a federalist system (with states and representatives), which would solve two problems: first, the Earth Kingdom is so immense, it is hard to maintain a centralized state unless you are someone like Kuvira, who coerces the various, seperate states into following her orders directly by siphoning resources. Secondly, it would solve the issue of each state "going its own" in regards to systems of justice, etc., and improve trade throughout the Earth Kingdom (the spread of the railroad, especially, makes a uniform economy/justice system necessary in the modern era). Although states like Zaofu and Omashu (which have always been highly independant) would likely still demand a high level of autonomy.
However, setbacks might include the monarch loyalists (it would take a lot of anti-propaganda measures to convince die-hard fans of the royalty that change is needed, despite the abuse of power demonstrated by the Earth Queen. Case in point: Bolin and Mako's grandma and well-meaning citizens like her) and secondly, the royals themselves who would be unwilling to give up their hereditary rights to power.
Personally, I think it would be reasonable to concieve that, since the Earth Kingdom has been shown to be the "most resistant" to change out of all the other nations, that they would go along with Wu's federalist reforms while preserving their monarch as a symbolic figure of the head of state. So similar to England's parliament/monarch system. The king wouldn't have power but it'd still be the Earth Kingdom.