Am I missing something about this? Let me know.
You are. You're missing the most obvious solution: Apple will make either sides of the notch black (this will look acceptable with mini-LED I'm guessing) and put menu bar items up there along with widgets/notifications/or something else. Essentially everything below the notch area will operate as 'the screen' just like you're used to, so when an app goes full screen the top of the full screen window doesn't go above the bottom of the notch. Right now going full screen causes the menu bar to hide itself to get maximum content real estate; with the notch it won't have to, it can use up the same 16:10 space it currently does on MBP but it won't have to hide the menu bar -- for that reason I actually consider the notch to be a huge win.
Current: Big top bezel, lots of wasted space. Less space on the main screen without hiding the menu bar which is a nuisance and defeats the purpose of having live informational data on the menu bar (WiFi status, music controls, Little Snitch, etc.)
What the anti MBP notch crowd want: No notch, keep the big top bezel. Essentially keep everything the way it is. The people that have to hide the menu bar to get more real estate will continue to have to do so.
Hypothetical notch scenario: No huge top bezels, imagine your current MacBook Pro except the wasted space either side of the camera now has permanent menu bar stuff so you get the benefits of hiding the menu bar on a current Mac without having to actually hide the menu bar. It's not that the notch is cutting into your content, it's that the area around the camera is being reclaimed to serve a purpose and solve a problem.
If Apple do that ^ I think the notch will actually be a huge win for the crowd of people that want maximum real estate without the current compromise of hiding the menu bar.
For the crowd worried about Linux/Windows native booting compatibility, Apple can probably create a kernel level workaround that only activates the screen area below the touch bar when booting into an alternative OS (like how the touch bar shows function buttons when you boot up Windows). If they don't do that on Linux then it's not like Linux doesn't already require three million drivers to get Apple devices to work so I imagine someone will create a fix for it quickly.