When Franklin was asked what kind of goverment the Framers had given us, he replied, "A republic, if you can keep it."
I think Bush clearly is referring to constitutional governance. Democracy is just a catch-all term easier for people to grasp and comprehend then a term of art like constitutional government. It is a bit cumbersome in a soundbite to provide an in-depth political science lesson.
It is a media myth that Bush only pushes for elections minus a multi-party element or constitutional and democratic institutions. They clearly haven't been listening when Bush has spelled out beyond just the soundbite what he means by the spread of democracy because he has specified the importance of the development of both constitutional and democratic structures in the type of transformation he wants to bring about in the Middle East. It's more than just electioneering. The media lapdogs are too busy seething with rage to hear the nuance and detail in his statements on the spread of democracy abroad.
No he's not. The principle requirements for democracy (if you don't like the word, just say governance accountable to the people) are a free press, independent judiciary, the rule of law, and transparency in business and capital markets. Despite the violence, Iraq is already at the very least even with Russia on all these criteria. In some, such as a free press, it is far ahead.
BTW, did I say "Puck Futin" yet in this thread? (Never hurts to type it twice. Puck Futin.)