I hope you don't mind - as soon as I posted I started trying to work out a less useless answer and so I've gone through quoting your post and trying to say what I think. Please do skip if (when!) it's boring.
'You seemed to be saying that Benedict personally (and perhaps Francis too if the stuff about his actions under the junta is true) was irreversibly tainted by his compromise with Nazism'
- No, not necessarily. No-one is irreversably tainted, and certainly Benedict's actions (I don't know enough about the new Pope) are things that we can easily understand why he did.
'You're still saying that making the choice he made is a qualitatively different kind of sin/evil which is so bad the RCC shouldn't have touched him with a bargepole because otherwise it would compromise its own moral purity.'
- No, not even a little bit. But, if the church is being a political entity, why did it choose Benedict? If the Church wants to uphold the idea that the Pope is somehow authorised to make hugely important moral choices, then how do they reconcile that with other choices made? The reason Benedict's membership in Hitler Youth matters is not that anyone thinks he did something appalling - but rather, because it illustrates that morality is extremely complicated, and that it can be very hard to separate events from the public perception of those events. Nazism has a stature hugely in excess of what happened (which is not to diminish the impact of what happened). Popes in the past have not had to deal with the concept of a 'world war'. Genocide has always happened - but our perception of it shifts. Yet the theology - the idea that the Pope can make a moral judgement all on his own - has not really changed. I am not sure that this is right or sensible.
My difficulty with this is that it just wholly clashes with my conception of sin and what the church is. I don't think there are special kinds of sin, I don't think any church is an inherently holy institution, and I think that attempting to ?buy? institutional moral innocence, or the appearance of it, is a doomed enterprise which can have terrible results.
None of this makes any sense from a Catholic point of view anyway, because talking about whether Benedict/Francis is morally fit for office is projecting a Protestant attitude of 'authority by personal virtue' onto Catholic structures of governance. RCs don't believe bishops and popes have authority because they are personally morally worthy of it - they believe they have authority by virtue of their divinely-instituted office, and are as likely as any of us to sin in any kind of way. And in the worst cases bad bishops and popes can obstruct the will of God and damage the Church's reputation. But ultimately Catholics don't think that matters because in their view nothing can wholly derail the Church or prevent God's will from ultimately being done.
'IMO we do have a way of dealing with the sin people and institutions commit in the face of oppression. It's called confession and repentance ? and that is something the RCC and Christians in general are not good enough at.'
I take the point, but both confession and repentance are retrospective. Ideally, we need a new theology that pre-empts. There is plenty of precedent. The Church has changed hugely. Confession and repentance became immensely more importance concepts after Lateran IV. Before that, the whole understanding of how they worked was different. I say this to stress that the Church can change and adapt, it doesn't have to be static.