I am writing a paper on a dystopia and how the leader came to be. I need a term to describe how he wasn't elected into power but he just assumed the role of instigator and no one questioned him.
I don't think there's a standard single-word term, but Google Books claims about 3,220 results for...
(There are a few hundred more for self-appointed ruler, for example.)
I don't think self-appointed necessarily and inherently carries negative connotations, but it's possible not everyone shares that view. So you might also consider...
de facto - something generally accepted or agreed to without any formal decision in its favor:
“They never elected him; he became their leader de facto.” - dictionary.reference.com
“He is our de facto leader”
There is a concept benevolent despotism (also called enlightened despotism) that suggests absolute power, but with a heart.
Associated with this term is a saying I have heard, but whose source I cannot find:
The best form of government is benevolent despotism -- so long as I get to pick the despot.