"Yes. You have two potential sellers vs. one buyer."
That statement is incorrect. ALL trades are matched. One buyer for every seller and vice versa, regardless of the underlying motivations of the buyer or seller.
And since naked selling is not possible, the beneficial owner of shares that have already been lent to and sold by a short-seller CANNOT sit in the Ask (selling) queue for the same parcel of shares until the shorter has closed-out their position (via a balancing repurchase) and returned the stock to said beneficial owner who may then, and only then, think about offering their shares for sale.
Poententially increased liquidity? Definitely! But there can never be a mismatch in the number of potential buyers and sellers for a given parcel of shares at a given point in time. That's one of the reasons why naked selling is forbidden.
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