That was one (but not all) of the dilemmas with OS/2, which I still feel was the better OS. If you try to maintain that compatibility, then people write Windows programs and there was really no need for OS/2 programs. When Windows morphed into 32 bit (on their timetable) the API's were not available, so people had to choose Windows or OS/2. The new Windows 32 bit OS (Win95) was backward compatible so one OS could run the new and the old apps. New OS/2 apps were not being developed and that and the marketing caused it's demise. Windows came bundled on new machines and that would have been enough right there.
No, if Linux is to succeed at replacing Windows, there need to be decent Linux apps, and for the most part there are, with the exception of games which are still mostly Window centric. Emulation is not the answer in my opinion. Applications will always run better on their native OS, rather than any emulator.
The other thing that will help Linux is Windows own restrictive licensing. WGA is the best thing Microsoft could have done for Linux. Vista will be even tighter, and if people have to plunk down hundreds of dollars for an OS that requires incredible hardware investments to function the alternatives look a lot better.
The bundling thing is another hurdle however. Most people use the OS that comes on their new computer purchases. That's where most of Vista's "sales" will come from.
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