Today, the church faces a crisis that may be no less profound, and it has to do it with the entire world watching. (Gregory didn't have to contend with the Twittersphere.)
And while many things remain opaque in the secret and closeted Vatican, one thing we know for sure is that the church faces a fundamental divide that threatens its future far more than the scandals that are dominating front pages.
"This time is different, the crisis is much deeper and more difficult to solve than it appears," an Italian bishop with long experience in the Curia laments.
"Catholics are deeply divided between a group of conservatives, constantly looking toward the past that will never come back, and progressives, who pushed themselves too far from any possible compromise with the other group. I don't envy the next pope."
According to sources close to the pope, Benedict XVI resigned because he felt he no longer had the physical and intellectual energy to address the Vatican's problems.
These problems started to emerge in the late 1990s,with the revelations of sexual abuse of children by priests in the United States.
Church officials hoped the scandal could be contained in America, but soon there were similar reports of abuses and church cover-ups in Ireland, Belgium, Britain, and even Benedict's old parish in Germany.
The fallout from the abuse investigations was compounded by other scandals including remarks by Benedict that upset the Muslim community in 2006, the rehabilitation of Holocaust-denying bishop Richard Williamson in 2009, and revelations of money laundering at the Vatican's bank, IOR, last year.
If Benedict were an elected politician, it's unlikely his government could have survived.
The most recent blow to the pope's authority was the "Vatileaks" scandal, which erupted in January 2012 when the Italian journalist, Gianluigi Nuzzi, received a trove of secret documents directly from the pope's apartment -- documents that proved beyond any doubt the disarray inside the Curia.
The revelations pointed to widespread corruption within the Curia, including bribes demanded to secure a papal audience. Benedict asked three trusted and experienced cardinals -- Julian Herranz, Jozef Tomko, and Salvatore De Giorgi -- to investigate the matter, and they produced a report that was given to the pope a few weeks before his resignation.
The report is classified, but that hasn't stopped rumors about it from swirling around the world.
The rumors suggest that church leaders have been routinely participating in at least two or three of the deadly sins.
The most outrageous accusation is that inside the Vatican there is a "gay lobby" strong enough to influence the church leadership.
It is not clear whether this accusation is actually written in the report by the three cardinals; however sources inside the Curia confirm to me that something like a "gay lobby" exists, just as they confirm the struggle for economic power around IOR, the Vatican bank.
The pope apparently knew all about this corruption before the report came out but didn't think he had the strength to fight the battle.
Therefore he decided to resign as a "great act of governance of the Church," as his spokesman Father Federico Lombardi put it.
Benedict couldn't solve the problems himself, so he opted to shock the Vatican and push for the election of a successor that will have a better chance to redeem the Holy See.
The Conclave that is about to start will decide the future of the Catholic Church.
In theological and ideological terms, the cardinals seem quite united: the princes of the Church that will elect Benedict's successor have all been named by him or by John Paul II, and therefore share a traditional point of view.
But that point of view puts them out of touch with an increasingly large number of their own flock. According to a recent Pew Research Center poll, 46 percent of American Catholics believe the church should change course.
Just to give an example, 58 percent would approve of allowing priests to marry.
The next pope doesn't necessarily need to dilute the Catholic teachings to please the crowds: after all, the successor of Saint Peter should still be able to do God's work, instead of following polls and spin doctors.
However if the Church doesn't find a united and convincing message, one that doesn't deny its teachings but is also able to confront modern challenges, it risks becoming a small minority, as Joseph Ratzinger himself wrote, though he believed the world would eventually come to its senses and return to the church.
The struggle for power inside the Curia, however, might be the strongest obstacle to a real and effective reform.
During the last eight years, the Holy See has been governed by the secretary of state, Cardinal Tarcisio Bertone, a position roughly equivalent to the Vatican's prime minister: right or wrong, he is considered the person most responsible for all the successes and shortcomings of the Vatican.
Bertone was born in Piedmont and was Joseph Ratzinger's right-hand man when the then-cardinal was the leader of the Congregation for the Doctrine of the Faith -- the Vatican's chief enforcer of orthodoxy.
No one knows and interacts with Benedict better, though Bertone has a somewhat more approachable public persona: he is passionate about soccer to the point that he once anchored a TV show about the game and even started a Vatican league.
Perhaps somewhat more relecant to his candidacy, he's also an Italian -- and after two successive foreigners, the Italians would like to regain the papacy.
The next most likely candidates are the similarly conservative-minded Cardinals Gianfranco Ravasi, Angelo Scola, and Angelo Bagnasco -- with several alternatives ready to jump in the race. Though "progressive" Catholicism may be a growing cultural force around the world, it's still virtually unheard of among senior church officials.
On the other hand, the desire for reform may pressure the cardinals away from an Italian candidate. "This would be the right time to elect an English-speaking pope," the American Catholic philosopher Michael Novak told me in an interview.
After all, Catholicism is shrinking in Europe, while it's growing in Africa, Asia, South America, and the United States.
An English speaker would be in a better position to communicate to the Church's main growth market than an Italian.
The main Anglophone candidates would be New York Archbishop Timothy Dolan, Boston's Sean O'Malley, and George Pell, the archbishop of Sydney.
"Novak is a very intelligent person, and whatever he says makes sense," Dolan said during a recent interview at St. Patrick Cathedral.
Dolan said that whoever thinks he is a leading contender (what's known as a papabile) is "smoking marijuana," however he added that "we should not rush to the Conclave."
Rushing, in fact, is a key issue -- it might actually define the process for the election of the new pope.
The Italians, or the Curia in general, would like to rush the Conclave: the less time the cardinals have to discuss and possibly argue, the more likely it is that an internal candidate will be selected.
The "foreigners," not just Americans, would like to have more time to understand the scandals' real dimensions and choose a candidate that is most equipped to uproot the weeds and reform the Church.
Either way, the next pope has his work cut out for him.