It's not a merge commit for every single commit, only for every, well, merge. I sure hope people are writing new features or bugfixes in several commits, not just doing days of work and committing at the end (though I guess that would be a workflow for people who are worried about the size of the commit log).

What's the purpose of keeping a commit history at all? Really, what are your use cases? For me, the history is for looking around and understanding a particular change, or for bisecting to help understand a bug. Both of these use cases are better supported by seeing the tree as it actually was when someone was working on it, than by seeing an artificial, rebased history. What's your use case where the rebased version makes sense?