No, you are taking a with-us-or-against-us mentality. Users and application developers want things to work as broadly as possible, regardless of the graphics card or driver being used. Whether that helps or hurts various parties regarding Nvidia's closed-source stance is irrelevant.
> Nvidia's position, literally, is their GPUs are not Linux compatible
Citation needed. If this is their position, why would they offer Linux driver downloads? Not supporting something in a way Linux would prefer is not the same as not supporting something.
>This is exactly equivalent to Nvidia not using WDDM and DXGI. If Nvidia chose to do that, Microsoft would outright ban them from driver certification (thus the platform entirely), so why is it wrong for Linux and Wayland to do the same?
Microsoft can get away with this precisely because it sells Windows; it lowers the price to vendors (such as Dell) on the condition that they only use certified drivers. It is entirely possible to run Windows with uncertified drivers. In any case, it is my understanding that this is a licensing issue, and Nvidia would support more APIs if it could do so while keeping the driver proprietary.