How would you end up with more than two transaction outputs?
How is it then that a transaction can have four outputs? Is it possible to pay more than one person (address) in a single transaction?


Yes, a transaction can have several inputs and several outputs. Those inputs and outputs can belong to the same user or a different user. So user A and B could make a transaction that combines several of their addresses and send money to C and D in as many of their addresses as they see fit. 

Actually the change address that you mentioned is not a special output; just an output that sends some money to any of your addresses.