"Now if only the licencing could be a little less restrictive. It doesn't need to be open source but it would be nice if both sdk and jre could be included in free software like Linux distributions that would probably be very beneficial to Sun and Java."
Read the license... You can include the installers with your own software as long as that software needs Java to run. When in doubt contact Sun, I don't think they'd object to including a JDK or JRE installer with a Linux distro as long as it was the full thing and not some cut-down version.
The reason many Linux groups don't do so is mainly parochialism and overzealously refusing anything that doesn't confirm to their overly strict definition of "open" or "free".