I don't think they will sacrifice the two party system, simply because there is no two party system to sacrifice. It's a one party system with two sides. They will simply become Republicans.
Not only that, but they have the resources to continue this song and dance forever, and will never give up control of the reins of the DNC, no matter how many elections Demsocs win. Winning elections never fucking mattered anyways, it was just an excuse.
What is necessary is actually radical movement that actually threatens those in power that forces the U.S. to focus more of its dwindling resources on it's internal enemies than external. They already think and act like that level of radicalism and organization exists. Why not actually deliver on it? You say we are stuck in legalism because we could be made illegal, but wasn't that always the case? And will it not become the case eventually anyways?
We have to think much more broadly, and much more long term.