Beginning in the late 1800s, and especially after China's 1895 defeat at the hands of Japan, many Han Chinese intellectuals began to speculate that they were living in the final years of the existence of the Qing dynasty. Anti-Qing/Manchu sentiment among Han elites was nothing new to China. There had been seeds planted with the hopes of overthrowing the "evil" Manchus from almost the beginning of the fall of the Ming, though nothing really came close to replacing it other than the Taiping at one point. What fundamentally changed the discourse of how to replace the Qing, should the time ever come, was the continual diffusion of Western ideas and practices into China mainly through Japan. Many early premodern Chinese intellectuals viewed a strong correlation between the success of Western nations and the existence of far more democratic systems in the Occident. Even with a monarchy, nations like the UK still had elected parliament officials, something China lacked.

With thousands of years of imperial history that Chinese elites could trace, where "Han" civilization was viewed as the premier cultural and martial power in East Asia, one question loomed large over the heads of intellectuals after the Sino-Japanese debacle in 1895; where did everything go wrong? So we've lost to the Westerners before, but now the Japanese? The war exacerbated the thought among many intellectuals of a world without the Qing, and a world without any sort of monarchy/imperial system. Most of the pioneers of the reformist movement in the late 1800s started off to some degree as a monarchist. Kang Youwei and Liang Qichao were famously pro-constitutional monarchist in much of their early writings, but there were certainly more radical thinkers out there, and Liang himself turned decisively against the idea of monarchy by around 1905.

Almost universally by 1905 all Chinese intellectuals agreed that the Qing had to be overthrown one way or another with a sense of nationalist urgency. The issue was what would China do after overthrowing a system which had existed for so long? Could they adapt to more democratic forms of governance so quickly? Liang and Kang both argued fairly consistently that the Chinese were not ready for the responsibility of democracy, and this believe never really made its way to other intellectuals such as Zhang Binglin, Tan Sitong, Liu Shipei, etc. One of the aspects that made Western nations strong was the fact that they consisted, to some extent, of "citizens" that participated in the state. The leading consensus from most intellectuals was a sort of egalitarian republic, but various ideas floated by figures such as Wang Jingwei, Zhang Binglin, Liang, Sun Yat-sen and Hu Hanmin on how to effectively transition after the empire was gone proved to be rather short sighted (as was the entire 1911 revolution) and never reached a consensus. Zhang Binglin most presciently noted that the issue with any sort of constitutionalism was that powerful local landlords and other wealthy elites would use their influence to sway the local elections in their favor. If there was to be a revolution, whatever came out on the other side needed to be egalitarian, this was what was agreed upon, but how to achieve that was not so clear. The good news for the revolutionaries was that the Qing ultimately fell in 1912; the bad news was that no one was really prepared for this.

All this is to say that by roughly 1907, monarchism as a solution to the fall of the Qing and China's problems was waved off by nearly all Chinese intellectuals. In the post Qing world, it is important to note that a large amount of intellectuals educated in Japan or further abroad joined the New Army battalions of Zhang Zhidong and Yuan Shikai. Cai E, a warlord based out of Yunnan and probably the most important leader in the Anti-Monarchist War, once studied under Liang Qichao and was later educated in Japan. McCord notes also that Yuan's decision to proclaim himself emperor of China made most of his officer cadre uneasy about his leadership. By 1915 when Yuan proclaimed himself emperor, many warlords that had taken over in the post-Qing chaos either viewed themselves as displaced nationalists waiting for the unification of China, the man who would himself unify China, or an opportunist who ruled their own kingdom with no higher authority. The spot of emperor did not fit anywhere in the post-Qing world. Intellectually, it had died by 1905. Practically, it was dead long before, as evidenced by the inability of the Qing to defend China in the eyes of Chinese nationalists.

As far as your last note on the Qing "really being that bad," well, there is a lot that can be said on the fiery, vicious, racist rhetoric that Manchus were constantly faced with in the late imperial period, but lets just say the Han had no love for what they saw as their oppression by a barbaric group of people.

Sources

Edward McCord, The Power of the Gun

Peter Zarrow, After Empire