So, there are two things that IRV proponents claim: one is that it "lets you vote for your true favorite" (which I see you've caveated; good) and the other that "it helps third parties."
The problem I have with IRV is that, as the second claim begins to approach being true, the first claim becomes more and more false.
IRV "works" fine when there are two big parties and a lot of little ones; people can rank the little ones highly, but they get eliminated, and your votes get moved back to the "proper" major party that they belong too. Okay, fine.
While you're more or less right when it comes to IRV I would disagree with the bold bit. Otherwise what you're saying is that the "favourite" party of a person is the major one simply because the preferences flow to those parties.
But when the little parties grow, that breaks down.
So consider, step one; A and B are major parties, C is a (very well-performing! 25%!) 3rd party.
45%: A > B > C
30%: B > A > C
25%: C > B > A
IRV handles this well. C is eliminated, and B wins by a narrow 55% to 45%.
But then the next election comes, and C is able to get their message out, and grows in popularity among those B-voters:
45%: A > B > C
25%: B > A > C
30%: C > B > A
C is in 2nd place now! So now the winner is... A? By a better than 2:1 margin? Well that doesn't seem right. No one's opinion of A has improved (and in fact, some people moved them from 2nd to 3rd). What happened here is that C spoiled the election, which is easy to see; if you ignore C, there's still a 45%/55% split among voters, favoring B in the A vs. B contest.
Except that according to your example those 25% of people who still vote for B prefer A over C. So while C has managed to improve their opinion among the electorate and garner more first preference votes, they've failed to garner enough support among A and B voters to get them to preference C above the other major party. You can say that there's a 45/55% split between A and B, but you would also have to admit that there is a 70/30% split between C and "not C".
By the way, considering that C managed to take 5% of B's voters why is it that B voters aren't preferencing C before A?
And then what happens in the NEXT election, is voters punish C.
Do you have any real world evidence of this happening?
They go back to voting for B, because they'll be damned if they let A win again!
Or they'd just preference C before A, which is a valid option as well. If B voters preference B > C > A, and assuming that all the percentages are the same, you would end up with C winning over A.
Because the truth is you CAN'T vote for your favorite under IRV, not when it actually matters, which means IRV WON'T help third parties either.
Only for strange definitions of "favourite". I would say that the first preference would be the favourite simply because it's the first preference. Otherwise you're telling me that in the last election I voted in my "favourite" was the ALP because they were my fifth preference simply because they're a major party.