Over at Kiwiblog they're discussing the claim that direct democracy would lead to crazy and bigoted policies. I think that New Zealanders would probably not be such a bad mob as most, but in any case direct democracy should not be conflated with mob rule. As I explain in this old post, the democratic question is merely about who should wield power, not how much power they should get, nor to what end they ought to use it. Citizen participation may take place within constitutional constraints, and with an eye to what's objectively good.
I'm suspicious of typical 'direct democracy' proposals (e.g. binding referenda and ballot initiatives), however. Raw public opinion is not much of a guide to anything worth knowing. But I trust that ordinary people are capable of making valuable - reasoned - contributions in the right context, e.g. a "Citizen's Jury" where a small group (randomly selected from the population) come together to learn and deliberate about an issue. Perhaps this is "representative" democracy in the sense that the decision is being made by a few people rather than the whole population. But it is "direct" and participatory in the sense that it is ordinary citizens who are the decision-makers.