...have to sign off on any reform, so giving them formal recognition in the process may be a feature not a bug.

The parties aren't *strictly* for incumbency: they're for 'safe party seats', which just happens to work out that way once any old crook gets elected to a safe seat for his party. The incumbents are of course for incumbency. So perhaps the teams that play the pie-cutting game are made up of *former* party officeholders as a slight countermeasure. (We may actually want people who are party loyalists rather than officeholder suckups for best game results.)

The degenerate two-district case is interesting, but if one party has even a slight advantage, their desire for a chance at winning two seats may sometimes outweigh their desire for one safe seat and one guaranteed loss. It would seem to depend on other governance choices -- how much of a premium is a governing majority versus a seat at the table?