Even in a sharply polarized contest, it's usually the case that most of the "third party" candidates receive fewer first-preference votes than those from the ma

Even in a sharply polarized contest, it's usually the case that most of the "third party" candidates receive fewer first-preference votes than those from the major parties. So the minor parties (and independents) are eliminated first, and their preferences are distributed. Which usually means than one of the major party candidates scrapes over 50%, reflecting the minor party voters' basic preference for one of the major parties over the other. In this (common) situation, I think IRV actually works really well. The major parties still end up in government, but they see the first-preference percentages for the minor parties, and understand what policy positions are important to the electorate.