UPDATE: Had the band meeting tonight with the guitarist, the drummer, and me. Unfortunately, it went as I predicted. We talked about the current situation, and how it's not working. The guitarist brought up how he can see things from singer 1's point of view: that we added a guy as backup and now he's having to share everything 50/50 with him. We talked about the pros and cons of each singer. In the end, the drummer unsurprisingly said he has to stick by his best friend (singer 2), and his logic was that he thinks he's the better singer of the two, and that he has a lot of potential to be so much more. The guitarist also thinks that singer 2 is the better singer, and mentioned how he had become friends with him, while singer 1 is not really in contact with him and so they don't have that type of relationship. They both felt that of the two, singer 2 was the more professional. Both the drummer and guitarist were fine with getting rid of singer 1 and keeping singer 2.
I gave my two options, either keep singer 1 or get rid of both singers and look for a new one (with me preferring the latter option). When pressed, I said that it's not personal, but I just don't want to be in a band where singer 2 is the lead singer. If we were auditioning singers today, he would not get my vote. I let the drummer and guitarist know that this is completely a business decision for me, and if I leave the band it's not under bad terms, and I would love to pursue future projects with them (which I absolutely would, they're fantastic). I also said that the core of the 3 of us was very good, and we should get a singer to match.
The drummer tried to convince me that singer 2 has potential and with time I will see it. I mentioned that I don't want to take on a project that may or may not pan out. The guitarist was against getting rid of singer 2, because he didn't want to be without a singer, as that would be a step back and rehearsal wouldn't be productive. He suggested that we keep singer 2, while I look for a replacement. I said I'm not going to string anyone along and tell them "you can play with us now, but we're looking to replace you". Plus, I'm guessing that whoever I find won't be good enough for the drummer to boot his best friend.
With that impasse, I wished them well. I agreed to take a couple of days to think about it, but I really don't see me changing my mind.