It's not a terrible system if those two parties actually represent the will of the American people.
You can only represent the will of a majority (which can be as few as more than 50%) of the American people, not all of them.
No, they represent some of what the people want. Hot button issues get all the attention and everything else is shoved into the back of a closet. Plenty of people likely vote for the two main parties because they're afraid the Worst Party will win if they don't vote for the 'lesser of two evils,' and they're too ignorant to realize that that attitude is partly what causes the problem to begin with.
you tend to have half a dozen parties, each with their own extremist positions, and there is little reason to pay attention to what the mainstream wants
Same here, but because people are afraid to vote for third parties because they feel it will increase the likelihood of their most hated party winning. They have free reign unless they really, really anger people, but they know the other guys will eventually do the same. The system is broken, I think.