Earlier quoted context omitted.
What is the realistic worst case situation here? From what I understand, git uses SHA1 as a way of generating an id for a file, not for security. So two files might match up when they shouldn't? Is that it or is there more to this? Or is this a proverbial "since SHA1 is don't work over there, then it shouldn't be used anywhere under any circumstance" attack?
As Linus touches on in the article, SHA1 is used for signing in git. This is clearly a security function, and should not have depended on SHA1 for at least the last several years. Additionally, the defense offered against substituting binary blobs essentially comes down to "well, the kernel doesn't do that". Respectfully, other projects do. Those users' concerns were not taken seriously until lots of unrelated users…
Why should it matter? Git was designed for the needs of the kernel project since the very beginning[1].
It is us, mere mortals, who are at fault for picking a tool that was not designed with our needs in mind, just because that tool happened to be better suited for our needs than the alternatives it was designed to replace.
The sky isn't falling, and if you really believe so, well, there's Mercurial, although you may also feel uneasy since Mercurial also asks you to don't panic[2]; Maybe you should just build your own SCM?
[1] https://git-scm.com/book/en/v2/Getting-Started-A-Short-Histo...