Democrats should dissolve certain state parties

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You could make make it similar to the Canadian party system, where provinces have entirely different parties to the national ones (aside from the NDP). It may be that America's unique system of party Identity would hinder such a set-up.

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tbh I wouldn't be opposed to this plan with some minor simplifications

Democrats ... should just abolish themselves for being useless and allow a competitive opposition party to rise.

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Yes, and Republicans should leave predominately liberal states, so libertarians will have less statewide competition.

This is like saying "the Democrats should abolish themselves in West Virginia to give the Greens a good run".