Ok guys here is the story. In order to understand what's going on you need to have a little background. Egypt has had two revolutions. The 23rd of July Revolution back in 1952 and the 25th of January that just happened.
After the 23rd of July Revolution Gamal Abd El Nasser ended up taking over from the British freeing Egypt from what was basically colonial rule and turned Egypt into a supposed Republic. Despite Gamal Abd El NAsser still to this day being one of the most beloved Egyptians of all time, he was in essence a dictator and the system and constitution he placed was so flawed that it ensured that Egypt would remain a dictatorship for the foreseeable future.
After his Death came is VP Anwar El Sadat who then continued the line of dictators. He was assassinated due to various reasons and HIS VP become the president, that was Hosni Mubarek.
For the next 30 years Mubarak ruled with an iron fist and the economy continued to stagger and slump. You see Egypt had a pretty good economy pre-1952 revolution because it was a very free open market economy. When Gamal Abd El NAsser came into power almost everything was nationalized and socialized. That had great benefits in the short term however endemic corruption and mismanagement ended up destroying once amazing free enterprise companies that were taken over by the government.
Now I want to make sure that you understand that I want to be as unbiased as possible, the only groups I take a stance against are the extremists and the Muslim Brotherhood are not extremists, I don't support them, however I want to give a fair view.
During Mubarak's reign people rallied around one major organization that had the power to fight him and that was the Muslim Brotherhood. During that time it was one of the most respected and loved organizations in Egypt. IT was a charity organization, a social organization, a family, a political force, a threat to Mubarak and an incredible idea all rolled into one. The problems started happening once they entered elections.
Now for clarification President Morsi doesn't control the Muslim brotherhood, he was only the president of their political arm the "Freedom and Justice Party". The true leader is Mohamed Badie (or in more ways than one, the person who holds the financials of the MB Khairat El Shater).
When they entered the spotlight and came out of the underground after Mubarak's fall they were unstoppable. They were the oldest most respected group in Egypt and swept the elections on promises that they would end the corruption and save the economy and undo all the bad that Mubarak had done and also They wouldn't field and presidential candidate.
During Mubarak's time the MB always ran campaign slogans of "Islam is the Solution", when it come for the elections this time however, they changed it and for good reason. The problem was that they had people understanding that once they went in, they would start implementing Islam and that would fix all their woes. The problem is, the current laws are too far from Islamic teachings already, the problems are inefficiencies and internal corruption rather than larger scale Islamic laws.
What ended up happening was this, a combination of MB members unable to fulfill their promises, lies told by quite a few of them, breaking their promise not to field a presidential candidate, their actions being (to an extent) blown out of proportion by the media and just general dissatisfaction with the direction that they took in general which resulted in the MB very quickly losing favor with the Egyptian populace.
Now we start getting to the really important part. In the middle of the presidential elections the courts ruled that the makeup of the Parliament was unconstitutional and (while we were still under the rule of Field Marshal Tantawy despite having a parliament) it was quickly dissolved leaving us without a parliament. At the same time the Egyptian populace was reeling from a major shock. Despite the MB losing favor with the general populace, its core supporters were able to push Morsi into the second round of the elections. While Egyptians who supported Mubarak and the old regime alongside Christians who wanted a strong military man to protect them from the Islamists (rightly or wrongly so isn't what I'm discussing right now) pushed Mubarak's former Prime Minister into the second round. However after the dissolution of the parliament, the people were angry at the military and was just enough to push Morsi over the finish line and make him the president.
One of his first orders after becoming president was to bring back the dissolved Parliament (while I'm not trying to take sides this was well within the confines of the law seeing as how all precedent points to the fact that the Parliament was never dissolved until a new one was elected. Also it states that the president has the right to bring back a dissolved one as long as he sets the date for new elections soon which he did by saying it would be 2 months after the completion of the new constitution).
However, the judges blocked this again leaving Egypt without a Parliament and in other words, crippled and unable to do anything.
Now let me try to make this as simple as I can. We have no parliament, without it budgets and most laws and changes can't be passed. In order to have elections we need a new constitution, however there is a MASSIVE opposition to the current one being made. Its also at risk of being dissolved by the courts. The longer the constitution is delayed, the longer the Parliamentary elections are delayed which further paralyzes Egypt.
Also, one of the campaign promises of Morsi was to bring the former regime to justice which become nearly impossible as the general prosecutor was chosen by Mubarak and didn't build a good case against him and the rest of the regime. Morsi tried to remove him but his move was overturned by (you guessed it) the courts. Only parliament can remove him aaaaaaand.....We don't have one.
So finally we reach this point in time where Morsi took a huge amount of power for himself, changed the general prosecutor but took quite a few new powers in the process (among them preventing the courts from appealing any decision he had made form then until now). However the most disturbing of the new powers that he took was the power to do whatever was necessary to protect the goals of the revolution which is in many was just another state of emergency where people can be dragged off by the police for no reason. Where it will or won't be used in this way is irrelevant, its the idea that it is once again possible.
Finally the last question, are we heading for a dictatorship? Maybe, I don't think so but maybe. He took a lot of powers but in many ways if you look at it through Morsi's eyes and the way the courts didn't let him do anything it was the only reasonable action. How far he uses these powers will still be seen but there is one thing I am sure of
The Egyptian people wont suffer another dictator. They will remove him way before he gets too comfy if he ever tries to stay in power. He doesn't have the loyalties in the military and the army that Mubarak had and in no way could face a very angry populace hell bent on removing him for more than week or so.
Negotiations are currently going on between him and the opposition about putting the 1972 constitution as a temporary one while the new one is worked out and fixed so that the country can get moving again, only time will tell what will happen.
Personally I believe in Morsi and I think that he is a good man despite many underhanded tactics that I've by the MB. I really think that what he did was good, not because of what he did in and of itself, but in the fact that it united the opposition and will get things running again instead of the painfully slow stalemate that we've been living in for months on end.
If you want to know I voted for Dr. Abd El Moneim Abo El Fotoh for president in the first round a former prominent Liberal MB member who left them due to huge ideological differences. I then voted for Morsi in the second round and am now part of a moderate/liberal Islamist party called the Strong Egypt Party. I am 100% pro revolution and I am not against any party except for the Nour party which is run by Islamist extremists. In case you wanted to know my stances and then claim biases one way or another.
Enjoy
