A dreadnought armored cruiser line can split into battlecruisers and cruisers

Could Britain have used a dreadnought-style armored cruiser as the starting point for later cruiser development?

Yes; capital-ship-gun versions could become battlecruisers while lighter-armed versions continued a cruiser line.

A dreadnought-style armored cruiser was technically possible. One branch could receive capital-ship guns and develop into the battlecruiser. A parallel branch could retain non-capital-ship armament and remain recognizably within the cruiser family. Battlecruiser development was one choice within a broader design fork; the armored cruiser had other possible successors.