Does the GOP understand the meaning of the two-party system?

I was watching Fox News this morning and someone made a comment about candidates being "too conservative" to win the general election. I have always wondered why the GOP used that line. Despite ALL the evidence, they think the majority of the country leans left. So they want to nominate a RINO in order to "win." Not only that but they'll actively destroy true conservative candidates in order to get their nominee.

Do they not understand the two-party system? The liberals are supposed to nominate their candidate, and the conservatives nominate their candidate. Each of the candidates is an alternative to the other. It doesn't do any good to nominate someone with ideas a little more watered-down than the other. What is the point of voting? This creates voter apathy among the Right and then the liberal candidate wins. Then the GOP uses that win as "proof" that the country leans left. At this point I think the GOP is just furthering the Left's agenda. Our group of potential nominees is so bad, so so so very bad. We desperately need new leadership in the party, or an entirely new party.