Ah, you're talking about SLFP voters second-preferencing the JVP. (I thought you meant UNP voters supporting the SJB.) That is more plausible, except the SLPP leaders and hardliners would attack it tooth and nail, fearmonger that it would split the vote and help the UNP win, and so on. No one wants to let go of power.

this new plurality-winning party is going to trounce the split alternatives, until one of them disappears, or both of them disappear.

Hard to predict. Depending on how many seats his coalition gets in Parliament, Dissanayake might have to get support from one of the other blocs to get bills passed. But if he can get a majority, he has a great chance to destroy both the established parties simply by appointing an honest auditor and letting them loose on the previous government's files.

When voters only get (or only use) one choice, and there's two parties on the same side of a divide, one of them has to utterly dominate the other, to stand any chance against a popular third party.

What the new party did was to challenge the old poor Sinhala vs Tamil+Muslim+rich divide, and turn it into more of a common people vs political / business class divide. Obviously, there aren't enough businessmen or politicians to form a party by themselves, so we'll have to see what they do. Maybe they'll negotiate with the new powers, or maybe they'll run smear campaigns, or maybe they'll wait for it to get corrupt and unpopular.

Either these voters start using their ranked ballots properly - or they're going to keep getting a two-party system.

The other possibility is a de-facto one-party state, like Mexico or Japan. I really don't see hardline Sinhala nationalists and hardline Tamil separatists co-operating.