Thoughts?
The Church of Rome has, for about a thousand years, give or take a few centuries identified itself as "the Church", with some vague accommodations regarding the Eastern Orthodox and a detailed theory of church-like bodies coming out of the Reformation. Since the days of Theodosius it has (until recently) also assumed itself (at least in theory) to be coterminous with society -- a church in Troeltsch's classification. There have been irregularities locally -- e.g. the situation in England prior to the "late Roman aggression" where there was no local hierarchy and where the C of E made the same assumptions but only locally -- but broadly speaking the two positions have coexisted hand in hand.
It continues to hold the first position: the relative thawing of oecumenical relations after Vatican II were accompanied by a clear delineation of the traditional view in the Council documents, restated in Dominus Iesus from the Sacred Congregation of the Faith in 2000. However, especially since the accession of Benedict to the papacy, it's possible to argue that it is moving deliberately in the direction of a remnant theology-driven view of the position of the church in (Western) society. It would like to be coterminous with society, and sees itself as the guardian of universal ethical values on which it has a duty to speak out, but much of Benedict's agenda can be seen as adjustments to make the distinction between inside and outside starker. Effectively, it is deliberately taking on more of the sociological shape of a sect and less that of a church.
Put simply, Benedict's approach involves a willingness to pay the price of losing adherents in favour of protecting its doctrine and structure. The upper hierarchy would like to eliminate "cafeteria Catholicism". Of course, the closer to the ground you get the priests and bishops also want to retain the resources which come from larger congregations, so there has been a lot of a sort of DADT attitude at the ground level towards dissenting views on women's orders, female participation in the liturgy as lay ministers, divorce, contraception, abortion, and homosexuality (all areas where the divergence between Catholic doctrine and popular practice is particularly marked) as long as they are kept relatively private. (This has been accompanied by a considerable relaxation in the principle that anyone receiving communion should go to confession immediately before the eucharist, and a tendency not to ask about certain areas of opinion which a penitent might not mention in the confessional.) There has been increasing pressure, however, to enforce greater conformity in all of these matters, as well as liturgical distinctiveness. Ecumenical dialogue has also become less fluid and more take-it-or-leave-it.