There is no reason why a 'third' or non mainstream party would not be moderate also. You will get the full gamut.

Of course most countries that have this system end up with regular coalition governments which is sometimes one criticism of the system. But surely a coalition working together as part of a parliament with at least three groups is better than two groups at perennial loggerheads with each other.

This only seems to lead to ever greater tribalism and us and them politics.