Be afraid
From the vitriol above, it sounds to me like the anti-linux brigade are seething. I don't think I've seen so many expletives in the comments section before. A note to the potty mouthed - it comes across like you've already lost.
Back to the story though - and I find it very interesting. It sounds to me like Google has intended to keep fairly low-key about the Chrome OS's Linux usage. It's no surprise that Google is using it, it's a large user of Linux internally and why re-invent the wheel? The frothers amongst you may once again argue that it doesn't work, but we must of course bear in mind that you are thick, and you are wrong. Wrong, because Linux isn't Gimp and Linux isn't OpenOffice, Linux is an OPERATING SYSTEM and those things are APPLICATIONS. Which by the way, run under Windows too. An OPERATING SYSTEM is something which makes your computer go. It (for example) controls when the fans come on and go off. If you stick a new card in, it is the thing responsible for loading the driver so that card will work, or not doing so and rendering it a lifeless lump of chips and solder. It picks up the signals coming from the keyboard and mouse. If you had a laptop with "just Linux" on it, it would boot to a prompt and a flashing cursor and nothing else, and would be of very little use to you. Like DOS.
But that's all that Google requires. Because the Chrome bit will be the user interface that it will stick on top of Linux. In the same way that Android has been the mobile phone interface that Google has stuck on top of Linux. It will be Google's equivalent of Gnome, or KDE, or Enlightenment, one of a handful of user interfaces that Linux users get a choice of.
I suppose the difference is that the above mentioned applications (Gimp etc) may not run under this new Chrome interface, whereas they will run under all the others. But Google's saying it doesn't require them - one, because it wants to direct everyone to it's online services anyway and two, because this system will not be aimed at people who require those applciations. It will be aimed at those people you see wrestling with Facebook on their mobile phones on the train.
Linux certainly has struggled in the past, and considering that struggle, has done bloody well for itself, it is now just as difficult and frustrating to get external devices working with Linux as it is on Windows. It has achieved parity in that respect. But that is through years of reverse engineering, and relentless nagging of hardware manufacturers to provide Linux drivers. And some now do - Nvidia for example. Also, look at the reluctant nod that PC manufacturers have given to all this nagging. Some secretive, under-the counter deals whereby PCs can be shipped with Linux, only to be retracted later following some pressure from Microsoft with the excuse that "no-one was buying it" and the ensuing crowing from the Microsoft fanbois.
Contrast this with the Google announcement, with barely a mention of the Linux name, and look at all the manufacturers lining up to partner Google. Nothing reluctant here. A great big press announcement, articles on the BBC (again with barely a mention of Linux, no surprise there). I don't think this is going to go away at all, I think this will be staged with all the hype of the iPhone launch; we'll see netbooks packaged with "Google Chrome" all over them and the word "Linux" will be nowhere in sight. Between now and then, Microsoft (and you lot, you know who you are) will be pointing and screaming "Linux" until you're blue in the face, but you know what? It'll fall on deaf ears - those people picking up the boxes in Asda and Tesco won't hear you, and if they did, they wouldn't have a clue what you're on about.
I think Microsoft should be worried. That Kodak example was a good 'un.
And as for those of you scoffing at the lack of applications, put it this way. If I was a producer of software for Windows (or any other OS), and suddenly masses of people were picking up these cheap netbook thingies, I'd be dusting off my porting team pretty sharpish.
Biting the hand that feeds IT
