I guess the single-member district system leads to your two-party system. If you had voting districts large enough to choose e.g. 10 or 20 representatives, then even parties with only 10% or 5% support in the population would get their representatives elected. And you'd have a multi-party congress.
Look at how political parties come and go in some European countries (not the UK, though). Not instantly, but in a 20 year time scale or so, the situation can change quite a lot in these countries.
Not at all. You can have a single-member district system using a different voting system, most of which are better than plurality (first-past-the-post). And you can have a multi-member district system using the multi-winner equivalent of first-past-the-post (effectively first-N-past-the-post), rather than some better system.
Look at how political parties come and go in some European countries (not the UK, though). Not instantly, but in a 20 year time scale or so, the situation can change quite a lot in these countries.