I'm not saying there aren't obvious differences. A multi-party coalition requires greater management.
It gives the more fringe a viable alternative for influence.
But the public does not take kindly to the tail wagging the dog.
I think you'd have to look very hard to find many if any examples of this in modern developed democracies.
Coalition bust-ups don't do anything good for the minor parties.
Largely true, but beside the point.
The government agenda will be dictated by the ruling party.
I think you meant "government agenda will be dictated by the largest party in government", or this doesn't make much sense (or is just false). If I'm correct in my reinterpretation, a) you're exaggerating, they can't dictate terms to partners, and b) while they have the larger share of control over the agenda... that's fine. I mean, they were more popular than their partners. Consensual democracy doesn't mean everyone has equal input, it means they have equal input in proportion to their votes.
And for most of the electorate, it still boils down to a choice between the large left-of-centre party and the large right-of-centre party.
If most of the electorate wants to vote for either of those parties, sure, but why is this is a sufficient reason not to incorporate a choice for more people?