I agree, differing distributions can be confusing to a newcomer on the linux scene. That being said, when at a local Unix meeting I regularly hear newcomers referring to "linux" when in fact they mean "ubuntu". This can easily be averted with a 5 minute explanation, not to mention there are very similar things going on in the Windows world ( Vista Home Premium vs Home vs Work vs Ultimate, etc. ).
As for documentation, does the person you're referring to actually make use of Microsoft documentation? I doubt it. Microsoft documentation is known for being cumbersome and bloated.
I agree, software is the key issue facing the Linux desktop today. I still have to run wine or full emulation for some things.
Installing programs, in newish distro's can be done by a website, without requiring the package to be in the repository. Slax and *buntu offer this to some extent. Not to mention a lot of packages are self contained, and will have a simple gui for ./configure && make && make install.
The command line is being used a little to much for "end users" in my opinion, and I agree with you on this. That being said, there are many different package managers out there for all different distro's that provide a way of avoiding the command line.
All in all, very valid points. In the end all distributions including Linux, Windows, and Mac OSX, have the same problem: If the user is doing specific things, or wishes things to be done in a certain way, they will find a way to do it. This extends to saying "My computer is broken, by me a Mac" - which happens more often then one would think.