So basically what Australia has for our state and federal upper houses :P
Honestly first past the post NEEDS to die. You know something is wrong when someone can win a seat without getting a clear majority of the votes. Sure preferential voting does lead to a 2 party system like first past the post, but if you win a seat via preferences you need to appeal to the minor parties and their supporters. Because without them, you may not have won at all.
Unfortunately, politicians do not want to remove and replace the system that got them in power.
As for voting in a head of state, imo it should be something like how we (australians) deal with referendums. Where you need to get majority of the national popular vote AND majority of the states. That way both the individual person has a say, plus the states themselves still have a say.