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Because policies aren't binary like that. I think Scott would side with them on policy like 60% of the time, but he would pick the better 60% of policies they have and leave out the insane culture war stuff.
The extremist candidates will get less initial votes, but if each moderate delegates to someone 10% less moderate than themselves then it ends up with the extremists anyway. Look at how Trump has captured the Republican party. I suppose you could model it as splitting the Republicans into two factions, the pro-Trump and the never-Trump. So suppose at the end of the day you end up with three leading candidates: Democrat with 45%, pro-Trump Republican with 35%, and anti-Trump Republican with 25%, the anti-Trump Republicans are going to be forced to delegate. If the anti-Trump Republicans decide to delegate to Trump in this circumstance to keep the Democrats out, then we see how extremists capture the moderate votes. If the anti-Trump decide to delegate Democrat because their candidate is more moderate, and if this stance is known ahead of time, then voting anti-Trump Republican is equivalent to voting Democrat. And some Republicans did that in the current system: they voted Democrat because it was preferable to Trump. But there is still the same pressure towards extremism for the same reasons as in the current system: ie the median voter theorem. Which hasn't exactly worked out nicely.
But there is another world where it's D/mR/tR = 45/35/25 where trump delegates to the moderates. You've put your thumb on the scales in this example. More importantly the point is essential to imbue your vote with the intelligence to make these kind of game theory decisions iterated down where there is much more flexibility. Are you really better off if you have to decide if you're going to need to guess if trump is the only way to stop the democrats from winning before you vote or by giving your vote to someone who can try every other options before it comes to that? Your example actually seems like the best outcome for someone whose preference is mR > tR > D, you complaint is contained in the fact that you've built a scenario where trump would have rightfully be who was selected.
And is that not the world we live in? In the existing system, with primaries, the electorate all decide which among their party is the most popular, and then the chosen candidates of those parties go against each other. In the delegation system the electorate all choose their favorite candidates, and then candidates within each party pool their votes together towards the most popular one. It's the same steps just in different orders, and the forces towards and away from extremism seem pretty much the same to me. In the world where it's D/mR/tR = 45/35/25, the moderate would have won the Primary in the current system and become the Republican party candidate instead of Trump.
There are small technical differences, such that you can come up with very niche scenarios where the outcome will differ. But I think the general pattern of having two monolithic parties with extreme candidates are the same in both systems for the same reasons, and in almost every circumstance they will lead to identical incentives and outcomes.
Trump in the 2016 primaries won because the establishment candidates failed to coalesce around an opposition candidate and he sucked all the oxygen out of the room. If all the other candidates got to delegate their primary votes Trump would never have been elected. although the whole thing looks different if you run it from the beginning.
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