>> "First, the world isn't running on Linux."
A significant portion of it is now. Maybe not desktop linux with gnome/kde/xfce/whatever, but it is in a lot of places. It's on a lot of home networking gear (NAS, routers etc), it runs a lot of the server room and has even found a home on mainframes. It's also in supercomputers and in a lot of consumer electronics these days (Android phones, kindle touch and I assume paperwhite).
I too have worked in embedded software recently and can tell you that some of the newer credit card processing terminals run a fairly standard linux-on-arm with framebuffer display setup.
It may be a niche desktop OS at present, but it does a hell of a lot behind the scenes, webservers are no where near the extent of it.
--edit--
I wouldn't be surprised if you were right on the arguments, as they are often quite ideological in nature.
--edit2-- Smart TVs! Love 'em or hate 'em, Samsung Smart Tvs run Linux too...
--edit3-- Also the most popular laptop on amazon US, and third most popular on amazon.co.uk. Sure it's a chromebook, but that's just a cut down, restricted linux too.
--edit4--You mention cars, Jaguar Landrover, Nissan and Toyota have recently kicked off "Automotive Grade Linux"
(I swear I'll stop editing in a minute but boring day is boring...)