The withering away of the state is one of the main disputes between Marxists and anarchists, I believe, but the Marxist conception of the dictatorship of the proletariat is not some Soviet-style oligarchy, but a democratic socialist society choosing to strip away the pieces of the coercive apparatus of the state until only voluntary communal associations are left. The Marxist-Leninist conception, on the other hand, is completely insane for the reasons you imply.