We should not have allowed the concept of the emperor being god, to continue to exist.
We didn't. Oh sure, there are still nationalists in Japan who think that way ... just like there are neo-Nazis in Germany despite the appropriately-draconian de-Nazification program enacted during the occupation. But they are relatively few and far between.
The process of tearing down the God-Emperor began almost immediately, when Hirohito was pretty much ordered to pay a social call on Douglas MacArthur (as opposed to the other way around). The result was one of the classic photographs of the 20th Century, one that - by intent - diminished the Emperor and helped the Japanese along in viewing the Emperor as the figurehead/symbolic representation of the state that he remains today: