Who is in posession of a legal copy? How?

Er... my bad, meant "embed and sell" (that is "distribute") as "use".  Should have been
sleeping for good %)

The license doesn't at all enter into the question of if you've got a legal copy or not.

If you go to www.kernel.org and download a copy of the linux kernel, this is a legal copy of
Linux. It is because www.kernel.org does infact have permission to distribute it to you (they
have this permission because THEY follow the rules stipulated in the GPL)

Now you are free to use this single copy of Linux any way you want without even READING the
GPL, much less adhere to it. It does in no way matter if you've got a license or not, you
don't NEED one.

The moment you want to do something that is otherwise prohibited by copyright-law, such as
distributing copies of the kernel to others, THEN you need a permission -- which the attached
GPL will give you on certain conditions. But only then. If you do -NOT- plan to distribute,
say you're only planning to use Linux on your own computer, then the GPL does not restrict you
in any way. (it even says so in the GPL, but even if it didn't, this would be the case)

I really don't understand why people persist in thinking they need a LICENCE to do something
that is allowed by default.

You only need a licence if you want to do something that is FORBIDDEN by default. (such as
distributing and copying the creative work of someone else)