It Works:
 

Well, I came up with rules to add a 3rd Dummy player to the game that
makes the game almost as good as a regular 3 player game. It can even be
used to make a 3 player game better. Here are the rules: Variant to add
a "dummy" player to 2-3 player Settlers of Catan: 1. Use unused color for
dummy player. 2. Players place their own settlements on the board and
draw resources. After this is done, do as follows: a. 2 players: each
player places one settlement and one road on the board for the dummy
player. b. 3 players: the first 2 players place one settlement on the
board, for the dummy player, the third player places 2 roads on the
board. Another variant would be to allow each player to place one
settlement and one road on the board for the dummy player, giving the
dummy player 3 settlements and 3 roads. 3. Play continues as normal.
Dummy player does not get a turn, but does produce resources with their
settlements or cities, if a player upgrades a settlement. 4. A player who
rolls the dice plays for both the dummy player and themself. The player
may use the dummy player's resources to build settlements, roads, or
cities, for the dummy player. If the player rolls a 7, and the dummy
player has too many resources, the player rolling decides which resources
the dummy player will get rid of. The dummy player follows the same
development rules as regular players, except the dummy player may not get
a discovery card. A player may also have the dummy player trade in cards
to get a different resource. 5. A player may also trade with the dummy
player. The first trade a player makes with the dummy player is a 1:1.
The next trade the player makes with the dummy player is 2:1, with the
dummy player getting 2 cards and the regular player gets one card. The
next trade a player makes, it is 3:1, then it goes to 4:1, 5:1, etc...
each trade increasing the number of cards needed to trade with the dummy
player by 1. Each player has their own separate trade ratio count that
goes up by 1, each time the player makes a trade. This ratio is not
effected by trades other players make. In addition, player may trade
different resource cards with dummy player during 2:1, 3:1, 4:1, etc...
For example, a player may trade one wood and one ore to get one sheep
>from the dummy player. 6. Before play begins, players decide if dummy
player gets shutdown by robber or if player can, when playing a robber,
take a card from the dummy player.