I always figured that the reason Loki was so awful at ruling was because he was so much better at being a master of chaos. And maybe that's why all of his plans are so terrible, and keep failing. He's not a end-game thinker; he just loves setting up the pieces, knocking them down and delighting in the shitstorm that follows. Which doesn't mesh at all with being groomed as a ruler. He's just got an entirely opposite viewpoint of what it means to be in control, which has nothing to do with the (what should be dull and peaceful) rule and everything to do with instigating mayhem.

As for the dom thing.. I'm not sure I agree on pigeon-holing Loki into any particular role. The one thing you can be sure of is that he'll always take it too far. And that he's vicious and likes freaking people out (the eye-extraction bit? yeah). Essentially, I don't think he knows when, or how to stop, likes not having limits, and will end up terrifying anyone he's with because he'll always be pushing and taking whatever it is too far.