Multiparty system offers much better option to vote for, but then there is only one coalition. So, the question is only if you are the one deciding what compromise to make, or party you vote for decides for you. There is argument to be made that it is better for democracy that you decide for that.
Each party in 2 party system tries to maximize number of votes and adjusts its position for that as well, which is similar to “power balances shift inside those coalitions” that you mention, but here, they are talking directly to voters, as opposed to each other. Again, I see advantage of two party system here.
I believe that bad perception of two party system is because now, we truly have two camps in our culture - the society is broken in two, cohesiveness is lost. But it is not because of the two party system, it is the opposite: because of this cultural break it propagated, “mirrored” into our politics. But it is exactly how it supposed to work in representative democracy. It would be strange if we had this cultural problem and our politicians would not.