Can I convert a 3-way switch that switches half duplex outlets into an outlet?
Yes, you can, and the general idea is:

If the power feed comes first to the switchbox you want to keep:


Convert your 3 + ground to 2 + ground by capping off the red wire with wire nuts at both ends.  (see Correct way to remove a red wire from a circuit)
Replace switch with outlet, wire up.
Replace remaining 3-way switch with a 2 way, and pigtail some new connections as such:


Bundled with feed black - Black from converted cable, black to hot outlet, pigtail to new two-way switch (This is 4 blacks - use the right size nut!)
Red to switched outlet to other terminal on switch.
All whites bundled. (3 wires)
All grounds to box grounding screw.



The major issue might be fitting everything into that one box.
As always, turn off the breaker before doing any work.