I stand corrected. I remember reading references to comments you had early in the LSM development process about how it was a horrible idea. The commercial interests I think you are referring to at the time was that early on when SELinux was being put forth for inclusion into the Linux kernel Crispin and the AppArmor crowd were trying to push for inclusion as well. At one of the kernel summits there was some sort of argument between the apparmor and selinux guys where Linus threw his hands up and basically said that he didn't want to have to make a decision about this. That security modules are like file systems and that everyone has different needs. So he ordered the working on LSM. From what I've heard this is exactly what the AppArmor people wanted because their original goal was to sell AppArmor as a proprietary security module.
I find it hard to believe that Linus would have threatened to remove LSM because it gave him a way to punt on making a decision on a single security model for Linux. However the second instance you're talking about was before any other security modules were merged. In James's email below you can see his justification for it . This happens all over the Linux kernel. Dead code is removed. Obviously this reason doesn't fly anymore since we have Smack, Tomoyo, and soon AppArmor in the kernel as well (Plus I'm using LSM for the label interface for Labeled NFSv4). At the time however it was a reasonable request until we had another user accepted. This also got things moving to get smack merged into the kernel and eventually tomyo as well. However I'd like to quote one part of that email which is what we are seeing here.
"Another isssue is that LSM is IMHO being increasingly mis-used as a way to
try and get rather arbitrary security code into the kernel, without due
justification, just because it has a few hooks in the right place, or
because S stands for security, or something.
This is an unfortunate side-effect of developing an infrastructure with
such weak semantics, and the initial grumblings from the core kernel
developers on this issue appear to have been on the money."