Yes, I realize that - and in fact I have DD-WRT running on my old WRT54G, but our market is not the mass market (I'm starting to sound like a broken record on that point). Sample 100 random WRT54G buyers, how many even knew that the router was hackable, and in the tiny minority that were even aware of such a possibility, how did it account into the purchase decision?
Not to knock on the router, but I seriously doubt its hackability had any major influence on its success.
But using a random version of Linux that they found on the Internet was probably cheaper than developing their own custom OS and DRM scheme. Cheap product development == more profit. And happier users, in this case.
The WRT54G shows that an inexpensive product that meets everyone's needs will sell better than an overpriced product that intentionally limits its own functionality.
Not to knock on the router, but I seriously doubt its hackability had any major influence on its success.