I'd go one further: distros in general haven't killed Python, Red Hat has. By tying their flagship OS to a six-year-old Python release, they've made it impossible for a lot of popular software to move on and take advantage of more recent advances in the language (since "screw everybody who uses Red Hat" simply isn't a viable option).

It's not reasonable to expect OS update schedules to coincide with language update schedules. Red Hat's priorities are extremely unlikely to be the same as yours. The apps I build that depend on ruby or python get deployed with a custom build of same into a separate prefix. So either dropping the python dependency or bundling python make sense for mongrel2. Maybe dropping it was easier in this case.

This is a complete non-issue. ActiveState for example installs Python, Tcl, etc in /opt.

Except no one installs ActiveState. For most, most of the market, the RedHat supplied version of python is python.

Does RedHat still have that much of a market share in linux to demand such? I guess I am out of the loop, but I hear way more about ubuntu these days than RedHat...

The US Govt can use Redhat, but not Ubuntu (Ubuntu hasn't been Common Criteria / EAL tested). That's a pretty huge market right there.

If you want to target "Linux" generically then stock Red Hat is your safest bet. I don't know anyone with 10,000 Ubuntu boxes in a datacentre.