Its not about crippling LinuxCoin its more about versatility. Some may want a tiny OS just for mining, others may want music players and all the bloatware. Moving the packages to a repository and letting the user choose what he wants is where I want to be going 
When i started the project I was thinking along the lines of your first post. But I quickly realized that people wanted different features etc. Also I realized the potential of having a OS dedicated to bitcoin and its users.
0.2a is a compromise in the middle
But its still alpha, hence everything like GCC and subversion being on the ISO. Eventually I want to make this distro as light as possible Linuxcoin was also designed with the miner in mind. its WDM and everything has been selected because of its low system resource usage etc. It was as much I could get it down to without loosing functionality.
And I would like to see ATI follow the path of CUDA and have its GPGPU accessible without Xorg. i think the reason this hasn't happened already is that ATI like to keep there source code to themselves. It should be open source !! It will save them money in wages and improve their current drivers ten fold
