I will follow this line of thought, and will consider the law’s use of force to be but an aspect of the kind of institution (that) it is.

it is 是定语从句，省略了作表语的关系代词 that。

that 指代 aspect, it 指代 the law's use of force。

意思是：法律诉诸武力是这种制度的一个方面。（有时可以不翻译出来）

又如：

We think that’s where this animal was trapped and evolved into the species (that) it is now. 

我们认为，那就是这种动物被困住的地方，在那里它们逐渐演化成如今的品种。

我赞同刘老师的分析：it is为省略了that的定语从句。但对that和it的指代有不同看法。我认为 it指代the law, that指代institution.

句子译文不变。