Interesting read! I agree with most of this, but the I'm not sure I agree with the argument that it would be more effective to convince government agencies to switch to free software by appealing to a civic sense rather than a fiscal one; maybe I'm just overly cynical, but I find it more likely that government agencies would be swayed to adopt free software by showing them how much money they'd save.
Government is not interested in saving. The power of individual in the government is associated with the budget he is responsible for. No costs on software - no budget, no power.
Ah, true. I had forgotten the phenomenon where agencies make sure to spend their whole budget just to make sure they don't get less money the next year.