I have tried a few games of this with only two players.
It does seem to work OK and is fun for the first game, but it soon becomes quite boring.
In one of the games we encountered a game-stopping problem.
I had no pirates left, and my opponent had 3 stacks of pirates (4,3,3)
And the only remaining boats were two 6-person boats.
In this case we just allowed her to grab her own stack - even though that goes against the rules.
I'm sure this is a rare occurance with two players, but it would justify the need to make this a three player game.
An alternative I would like to try is to include a dummy third hand with only the two (or 3) more highly priced pirates (5 and 4) so that the two players have more options of where to 'recruit' from.