As a side note, I did install ubuntu on a Dual Core 1Ghz, 1GB ram LG Connect phone. I was surprized how well it ran. I'd say as good as a netbook.
Another thing I do is try to find native linux binaries compiled for arm and they do work after you give them permissions to execute. I was able to run intel's PowerTop application which was pretty cool. I'm sure there's many more ported commandline apps out there.
Since I know more about linux than android API or just find it much less work to do things directly in linux (like talking to drivers), my apps tend to be dynamically generated shell scripts using the android views etc... just as fancy front ends. This tends to require root permissions for some stuff, but for me it's just a ton less code.
As for linux taking over, it really has. Pretty much everywhere. Routers, microwaves, tv's, etc... with the exception of desktop pc's. Servers are often linux too like the one at my work that I set up. I use linux as my main OS and have for a few years at work on my worstation and at home. I can tell you it's probably about 75% ready for primetime, except for a few bugs that shouldn't really be there. It just needs polish, but feature wise, windows is a non-competitor except for gaming.