Normal people will download a debian CD and get XFCE and think that's linux on the desktop.
What I don't understand is why linux always optimizes for the corner case of a couple ultra cheap geeks who can't stand the idea of upgrading their 300 mhz celeron.
I disagree about the 'normal people' point. 'Normal people' are less likely to download Debian as opposed to Mint or Ubuntu. If they venture into Debian territory, they're looking for something more and know what they're doing.
Which leads me to your third point, that is, I would venture a guess that the number of people who would care about this might not be in the minority after all.
(Disclaimer: I have made assumptions about the numbers, if someone has nice numbers to refute/support this argument, please do the honors.)
Also, 'ultra cheap geeks' are usually puppets controlled by the management.
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Basically a 233MGhz processor and 64mb of ram will get you a usable windows xp installation.
But even then, you're showing incredible hubris by saying "screw those guys, let them pirate XP". Debian's strength is that it tries to be universal - platforms and languages.
There are continents where Internet speeds are not great (or are expensive) - some of those are first world countries too. (EG Australia).
Many people don't care if they can bash the arrow keys on a Google Doodle. They just want to send a bit of email and do a bit of gentle web browsing; maybe a bit of light office work and some pdf reading.
WordStar and WordPerfect sold a gajillion copies and are fondly remembered by many. Abiword would cover the needs for 90% of its users.
 and all the copper; lead; rare earth heavy metals; aluminum; plastics; gold; etc etc.
Would "normal" people download Debian CDs though? I wonder if this change will pass unnoticed precisely because it is only people like "you and me" that will be interested in Debian.
And I love that about Linux. I absolutely love how minimal you can get it (CrunchBang for me is the right mix). But it's time to focus on user experience if we ever want Linux adoption to spread. And that means we have to stop optimizing for computers that came out 10 years ago.
The other thing is, if people want a sweet enduser experience, they're not going to install the default Debian install anyways. They'll use an enduser-focused distro like Ubuntu.
I recently installed Debian on a Dell server with Broadcom network adapters. Couldn't use the netinstall image because by default Debian doesn't include non-free firmware. It was nice to be able to use CD1 to get a fully functional headless Debian system, to then install the non-free firmware package from a USB flash drive to get network connectivity.
That said, I don't see how xfce is worse than gnome in its current state, so it's entirely win-win situation imho.
No, they won't. Most normal people are not even capable of burning an ISO, let alone selecting ("so, do I use i386 or MIPS?") and downloading Debian.