I'm not sure of the degree to which the two party system is a problem for state legislatures. It's an obvious problem at the federal level, but you do still stand a chance of knowing your local legislator to the state. When the constituents and representatives are just abstractions to each other, of course a party comes in to act as a middle layer.

But I do like the idea of list systems. Geographic districts are an artifact of slow communications, which don't exist any more. My neighbors and I have fewer overlapping interests than they did in the past.