Hoppe argues that legitimate monarchs, who are secure in their political power, will treat their country and subjects as long-term capital to preserve and extend, whereas mere illegitimate dictators, who rule by force, may be toppled the moment their look weak, and have little chance of spawning a durable dynasty, will treat their country and subjects as short-term loot, out of which to extract the maximum value while their short reign lasts. But where is that legitimacy supposed to come from, to begin with? Is the average monarch more like Hans-Adam II, Prince of Liechtenstein, or more like Chlodwig I, king of the Franks?
Historically, most monarchies started through conquest; the only trace of legitimacy in the title of "king" was through the occasional election of a local chieftain as military leader of an entire army, which after invasion of a larger country is now installed as the Master Race (they also say "nobility" or "aristocracy", e.g. romans, anglosaxons, normans) of the country and domineering the serfs of the inferior race of the conquered (celts, romans, anglosaxons). The kings' valued capital is their somewhat faithful gang of mass murderers, that they have to treat well. The conquered are just subjugated enemies, to keep trampling upon least they revolt: not so much farm animals to tend to as wild beasts to enjoy as game.
Now, even the gang of mass-murderers isn't the king's legitimately fully-owned property, and many a king was toppled by a subordinate military leader. Kings were always trying to find a way to subjugate the master race as well as the inferior races; sometimes they failed and had to grant a Magna Carta; sometimes they succeeded and crushed a Fronde; but then without the nobility their successors were naked against the people rising as a political force and instituting democracy.
Whatever "legitimate monarchy" Hoppe is dreaming of as an alternative to the democracy he rightly loathes is thus not to be found as the historical norm of monarchies, but as an exception. And it isn't something that can be instituted ab nihilo: whenever the democracies collapse, the peoples are unlikely to voluntarily elect monarchs who would then have some legitimacy; and if they had this power and could be taught an ideology that replaces the religion of Democracy, the hero-worship of a savior monarch isn't the ideology that would be either the best or the easiest to instill.
My conclusion is that while Hoppe's argument is an interesting thought-experiment, indeed one that is essential in understanding the nature of political regimes, it doesn't describe past historical monarchies, and is of little use as a project for future political regimes. The one notion that matters is that of property rights that are secure because they are legitimate — and they don't apply well to political power, that consists precisely in the ability to violate the property rights of the subjects.
PS: My friend Jan reminds me how he already made the same argument against Hoppe regarding immigration: in both Hoppe indulges in thought experiments where one could magically alter one aspect of a Government's rules and policies, while remaining powerless to alter any other aspect. These thought experiments may be crucial indeed in understanding the aspect selected for consideration, but they have no value whatsoever as guides for actual political action — and Hoppe and his followers are deluded if they believe it has any.