You can "functionally destroy" the Papal States by capturing all Papal cities/castles. Killing or waiting for the Pope and all Cardinals to assume room temperature. If you are a Roman Catholic power, stop recruiting priests or assassinate one if he becomes Pope. Damage all other factions churches so no priests can be recruited or destroy all catholic factions. Assassinate all enemy priests and cardinals. A priest has to be level 5 to be made a cardinal. So although technically there will always be a College of Cardinals it will be empty and no Pope can ever be elected. I am not sure if all this is done - say you assassinate the last Pope who has an army with him - that the Pope's army disappears when he is killed and there are no cardinals. I don't think it does and you will have to destroy it, but I can't even remember because it has been a couple of years and is inconsequential anyway, except that the Pope's Guard is made of supermen who never falter of faint.