1)It Would keep the Tories out for a Generation (which is why many on the left now favour it). However it's a very bad idea to set up any system that would keep ANY party in uncontested power for years IMO. That's a recipe for the decay of state institutions, leads to public ennui about politics, and could lead to a road of the loss of democratic responsibility or even revolution (worst case scenario).
2)The Lib Dems would have undue influence on the government. Part of the problem I have with the Lib Dems is that they know they wont be in power so can say almost anything they want, this means that their fringe loons have influence way beyond what would be considered normal in any party, just look at their EUphilia and green policies.
3)Labour, barring a nightmare (In Coalition with the Lib-Dems), would be in power for decades, no doubt with a similar method that they use now to ensure no proper debate in Parliament thus avoiding that the majority of votes are debated simply because of the secret dealing for influence that will go on between minority parties to ensure a vote is passed will make sure there is no strong government.
If I'm totally honest though, reason number one is the main reason. I know Centre Left Government in Britain would probably disenfranchise the Centre Right in the UK for up to a generation yet lead to more problems in Wales and Scotland where the left totally dominate, it might lead to the BNP getting a seat in Parliament, almost certainly UKIP. I also believe it will break the UK up, so there are certain advantages, though it's not the best way to go about it.
Is this Fair, and is this form of democracy democratic, if its put in place to stop one party gaining power? No, It's emphatically undemocratic. It's also dangerous. The potential dangers of such a system means at the very least it would make Labour politicians ineffectual and incapable of proper debate, leading to Periclean government by diktat. If you've got a Pericles, then you're fine. But if you get a Cleon, then Heaven help you.
A Moral maze, a belief in Democracy, or a never ending Labour party in power, which is why Gordon Brown is now interested in it.
I think the best answer is that the current system is functional, and appears to prevent serious abuses that would generate massive public unrest. I'm not opposed to reform of the Lords -at the minute it's half done and just a mess. But the wholesale change of the electoral system should be approached with great caution. After all, si non confectus, non reficiat.