#1
One of the traditional slogans of certain Trotskyist groups was "Neither Washington Nor Moscow". The idea was that the Cold War mythology presented a false choice between capitalism and Stalinism. The proper role was to build a "third camp" that supported democratic socialism. The idea tends to emphasize that supporting the lesser evil is still supporting evil, and that this false dichotomy between two powers betrays the fact that they have interests in common. As Chomsky suggests, the mythology of the Cold War was functional for both powers - dissidence was tolerated insofar as it fit the binary mode.

The idea of a "third camp" is also central to many anticolonial movements. For example, the Non-Aligned Movement tried to build a third way based on national sovereignty and cooperation for development. Many of these countries vacillated between the two superpowers and many had governments that considered themselves socialist in one way or another. Many non-aligned countries sympathized with Soviet-supported national liberation movements but were wary of Soviet tutelage and control.

Moral reasoning concerning political decisions can usefully be centered on hard cases that are considered in relation to a third camp idea. For example, one can imagine oneself in various historical situations and then decide what one would have done, which "side" one would have supported. I would argue that, in most cases, the "third camp" idea is largely untenable. And I would attribute this, in part, to the psychology of political strategy. That is, there is a tendency for there to be a broad hegemonic relation that is articulated as a conservative moment, and a broad counter-hegemonic relation that centers on reform. Neither is intrinsically "good", they are just subject orientations. What tends to be contested is the articulation of each hegemonic relation, not the binary itself. Further, the "third camp" idea tends to be built into a preference for one or the other camp.

For example, take "third camp" Trotskyism itself. Famously, a number of Trotskyists that supported neither Washington nor Moscow ended up by supporting Washington. Some supported the Vietnam war as a defensive war against the encroachment of a bureaucratic dictatorship, supporting the minimally democratic USA. Obviously there are cases like Christopher Hitchens (a former International Socialist member) supporting the war against Iraq. Even among anarchists, Noam Chomsky admits that he believes the USA is the best country in the world, despite its numerous crimes.

Lenin is often presented as a sort of exemplar of "third camp" thinking. That is, between Russia and Germany, he supported a third choice of worker's revolution against the war. I would argue that this is misleading. Lenin's point was more that Russia and Germany were a single hegemonic bloc of imperialists that were squabbling over colonial possessions. The "true" second camp, then, was the working class against capital, the colonial against the colonizer. Isn't that what "third camp" supporters believe? Not precisely - Lenin was fighting for the renewal of a binary (Social Democrats against Capital) from the perspective of a failed reformist tendency. In other words, Lenin was taking on the mantel of a proletarian insurgency as the truth behind the system. There is a subtle difference here, where Trotskyism is positioned as "above" the fray as a third option, Lenin was reformulating a second option.

This is not to say that picking a side is an easy thing to do, it is wrenchingly difficult in many situations, often because the levels of evil and danger on both sides are extreme. In fact, it is incredibly tempting to take on a "third camp" like position in most situations, or to try to portray a moral choice as if the ideal option were available to others but since they are faltering you are not to blame for what goes wrong.

Again, take the writings of Trotsky as emblematic of the above point: Trotsky wrote two striking things about the prospect of a German invasion of Russia. First, he said that we shouldn't fear the Germans too much because they would find being occupiers repugnant and would rebel against their commanders. Second, he said that there ought to be a worker insurrection against Stalin so that the defence of the country could be organized. But what better opponent could Hitler ask for! The Soviet Union faces invasion and the first two things that Trotsky says is that we shouldn't worry too much about the German troops and that we should aim for a productive civil war as they advance! Here we see how a position that tries to abstract itself from the realities of Russia (Stalin's leadership) ends up in catastrophic absurdity.
#2
Ron Paul 2012

But seriously, good OP. That is a good way to put things
#3