Raul Castro is changing Cuba, and for the better. He has already given
amnesty to certain prisoners. He is allowing entrepreneurship to
blossom just a bit, and permitting Cubans to think for themselves more.
Probably, he realizes that he and his brother will not be around forever. As a
thoughtful leader, he must foresee big changes coming soon. As a man who loves
his country dearly, he must want to make the transition as easy as he can.
Raul Castro will eventually democratize Cuba. Many of his political moves and ideal lean towards a liberal agenda. This leads me to believe that he wants to democratize the country. He has not announced his intentions is because people do not like change. Castro will make the process gradual but Cuba will be a democracy in the near future.
It depends on how things shake out, though. Raul Castro has shown that he has a much more liberal attitude towards politics than his older brother. That attitude might change when he is in total power, but I doubt it. Raul was willing to risk the wrath of his brother and make some major changes while Fidel was still officially in power. I bet that he will make even more changes when Fidel is out of the picture.
I believe Raul Castro will likely democratize Cuba. Since he has been in power, I have heard things on the news that have led me to believe he is not as much of a dictator as Fidel was. Cubans have many reasons to be hopeful that their country will become a safe, pleasant place with many more freedoms than they have had in the last half century.
Raul Castro has to some extent, and most likely will continue to reform Cuba, but there is little chance Cuba will be democratized in his lifetime. Raul Castro most likely realizes that the communist economic system has been a failure and wishes to change, but that does not necessarily mean he he believes in democracy. He most likely wishes to emulate countries such as China or Vietnam.