The one comment I'd make on the wolves vs sheep analogy is this. In the real world, there are both wolves and sheep. Violence and coercion are part of life. Democracy, in a sense, recognizes the power implicit in large numbers of people. If they can't vote, they may revolt. No libertarian government will survive without the acceptance of the masses.
A populace willing to countenance a Libertarian society would perhaps be wise enough to be entrusted with democracy, anyway.