I doubt he'd downgrade to provincial politics once he was THAT close to leadership of a national party.Maybe he wants Scheer to kick him out so he can be a martyr? Then he'll be able to create his own party or join another one (people are starting to speculate he might go PCQ).
They should. But they won't. They know that if they stay together they'll have the advantage come election time when the Left does what the left does best, Split the vote, while the Right snakes up the middle to victory.
You make it seem like they'll always have a choice in the matter. I mean, we already have a party that's an enduring pain in the ass because of a conservative party schism that couldn't be outmaneuvered, remember?
Besides, the centre vote will abandon the Tories if they don't put on more airs of respectability and Scheer's behaviour so far shows that he wants the CPC to keep their mullet (respectable from the front, nutjob from the back). Losing that air of respectability even partially or temporarily is what cost Harper his government in equal measure to a stronger and unified Liberal Party.