" Tories saying it ought to be preserved because it was clever, and Radicals saying it ought to be destroyed because it was stupid, and all the time no one saw that it was right because it was stupid, " -G.K.Chesterton, "The Napoleon of Notting Hill" (actually talking about something slightly different, but the quote is apposite here).
I think that purely ceremonial monarchy is quite a good system.
How often have you heard people saying about e.g. George Bush "You may not respect the individual, but you have a duty to respect the office he holds, so moderate your criticism"?
The great virtue of a hereditary monarchy is that one can say "You may respect the individual (conversely, you may think he is a fatuous big-eared fool who talks to plants), but you have a duty not to respect the office he holds".
I think that it is healthy to separate the individual who serves as a ceremonial focus from patriotism from the individual who actually runs the country. If you're doing that, you want to make sure that the ceremonial individual does not hold any power, and that it is universally obvious that their views carry no weight. And the great virtue of hereditary - better even than lottery - is that it makes it absolutely clear that the holder has no kind of mandate for any kind of power whatsoever.
The big scandal in British politics is not the monarchy, it's the House of Lords, which does actually wield power. (Also, the civil list should be smaller, but that doesn't matter so much).