We ran Linux and FreeBSD on production servers - well I started administering them it was in late 1999. Back in those days you chose the components of your servers carefully to get supported hardware and you weren't surprised when something not listed as being explicitly supported didn't work, and yes you would wait for a couple of months or longer for new drivers to come out.
Watching FreeBSD build itself over the internet from a single boot floppy was an experience verging on the mystical; and ports at the time had no comparison to any software distribution system. You could download, compile and build software with three commands, it was pure magic.
I know of people that were running headless Linux servers from about 1996 onwards, for things like file and mail distribution and as firewalls. And to compare it to the offerings of the time from Microsoft or Novell - they were pretty damn good.