A vote for a third party candidate ultimately goes to the "worst of the two" because otherwise, the vote would have been for the "not as bad of the two".
Of course, that ignores the fact that the electoral college vote (NOT the popular vote) decides the results.
If you live in a "safe" state (CA, WA, ...), where one of the two big candidates is effectively certain to win, you can vote for your first choice third-party candidate in a way which might help in the long run -- once e.g. the Libertarian Party gets 5% of the vote in an election, it gets federal matching funds, and will be a lot harder to exclude from the process.
In the long run, I think I'd take the worst of the D/R candidates over a string of 8 consecutive elections if the consequence is ending the two party stranglehold.
The way the system works, without proportional representation, you probably will ultimately end up with two parties, but I'd rather replace both current parties with new competent-but-ideologically-distinct parties (like, say, a Green/Socialist/Union/Interventionist/etc. party vs. a Libertarian/Free-Market/Business/Isolationist party).
If you don't vote for them, it's guaranteed they won't get traction.
If you're reading this and live in California, you should strongly consider the 3rd parties on the ballot. Obama's got the state locked up by 15-20 points, so there's no risk in third party voting. Obama will win, Romney will lose. This will happen however you vote.
So take a look at the 3rd parties, and if one of them more closely matches your views, support them. Don't waste your vote on parties you don't believe in.
I consider voting for a third party to be more influential. When any third party gets any significant tracion, the two major parties start revising their platform to bring in those third party voters. Instead of pushing forward the status quo and giving the main parties more confidence in their stance, you're causing them to think more about what they might change.
I still (maybe ignorantly) vote for the candidate, not the party, which is why I couldn't see myself voting for that 3rd party that you are insinuating. Once they have a viable candidate, I may. I hope that day comes soon.
Actually, someone should move hundreds (or thousands?) of tech entrepreneurs or smart tech-startup employees to NV, especially if those entrepreneurs could be politically active.
NV is a battleground state with a fairly small population, so even 500 votes with a common agenda would get national candidate attention in the 2016 race. That's probably the most effective way to influence Presidential politics. It does require a year or two to plan ahead, but NV is not a horrible place for some kinds of business, either.
I for one look forward to our new shoe-retailing overlords.
Of course, that ignores the fact that the electoral college vote (NOT the popular vote) decides the results.