A 3 or multi-cornered fight could work for or against WP. Whether or not should Hougang be reserved for WP, boils down to just one question, why is there a need (if at all) for having opposition to PAP?
Unlike other countries, PAP the ruling party has pretty overwhelming powers, resources and influence over all other political parties. They had been in power since independence, and will continue to do so unless some party somehow managed to build up their strength to offer a clear alternative to the default ruling party. And the reasoning for having a balance of powers - which I am very sure most people will agree to, is that PAP do not have the monopoly to talents and wisdom as to how best to run the country. In fact they have been proven in the years leading to the latest GE, that they do falter and make mistakes.
The fight over Hougang should be seen in the bigger picture. Are we willing to risk having Hougang retaken by PAP? The implication would be that the hard earned grounds towards a more balanced of powers and towards a first world parliament would be loose, even if it's just by one seat. This would be a real risk that would become a reality if there is no unity amongst the opposition. It is very attractive reasoning to mask personal selfish ambitions with giving the Electorate a choice. This logic would had been valid in a GE or PE scenario. But this is a By-Election, and it is clearly opportunistic if other Opposition teams decide to throw their hats into the ring at this time.
Let's remember this BE happens only because WP has taken the moral high ground at the first place, in order to be accountable to the Electorate in Hougang. It is a very hard decision to take, and they risk loosing the seat, whether to PAP, or to other opportunistic opposition parties. But they do so, to show to PAP what accountability is all about. Something that we Singaporeans have been deprived of since Independence.