Jim, I agree with your premise (real danger coming from the police), but not with the conclusion (armed citizens as antidote to state monopoly). In reality, "armed citizens" are the major justification (at least in this country) for the rather lax rules governing police use of fire arms, and the overall military style of policing (which resembles more pacification campaigns than upholding the rule of law).
The dangers of the armed and militarised police are far greater than the danger of armed outlaws. Moreover, they outweigh even the most optimistic benefits of armed citizenry.
As I repeatedly said before, I have no particular feelings toward guns and gun legislation, and I think that both gun legislation of any sort (ban or permission) and gun ownership itself are of marginal significance for the social problems faced by the USers. However, or perhaps because of that - if the right to bear arms is the price to be paid for disarming and demilitarisng the police - I think that such a price is well worth to pay.
Wojtek