I am not a lawyer, and this is not legal advice. However I have discussed the OSD directly with both the original author, and with people who have maintained it since. I have also discussed licensing enough to feel that I have a better grasp of it than most hackers.

You are right that the structure of the document is suboptimal. That is because it was not originally intended as a legal document. It was a written guideline for the Debian project, intended to be understood by people deeply involved in that project.

The wording of item 1 of the OSD is complicated by the fact that they were trying to make sure that Perl's Artistic license was covered. Item 5 of the Artistic license reads,

5. You may charge a reasonable copying fee for any distribution of this Package. You may charge any fee you choose for support of this Package. You may not charge a fee for this Package itself. However, you may distribute this Package in aggregate with other (possibly commercial) programs as part of a larger (possibly commercial) software distribution provided that you do not advertise this Package as a product of your own. You may embed this Package's interpreter within an executable of yours (by linking); this shall be construed as a mere form of aggregation, provided that the complete Standard Version of the interpreter is so embedded.

This comes in conflict with what they wanted to say, which was something like this:

The license shall not restrict any party from selling or giving away the software. The license shall not require a royalty or other fee for such sale.

The intent, of course, being to make sure that any software included in Debian could be included, either as binary and as source, in a Debian distribution which could be given away or sold by any third party. The actual wording used meets this basic intent, but is convoluted specifically so that Perl's Artistic license is accepted.

Your pleading that they mean something special by distribution misses the mark, and will singularly fail to convince anyone at the OSI. Your pleading further fails because common usage of the words "distribution" and "redistribution" are exactly opposite from what you say. If you don't believe me, I invite you to skim this Microsoft document for the word "redistribution".

In case you think that there is any lack of clarity, read the first sentence of item 2 of the OSD. The program must include source code, and must allow distribution in source code as well as compiled form. Item 4 is also clear on this, The license must explicitly permit distribution of software built from modified source code. What do you think that "built from" means?

Moving on, I have you idea whether you correctly portrayed what theorbtwo said about item 6 of the OSD. But your description of what it means seems correct to me. The point this to block people from doing things like produce software for editing video, and say that it is OK to use it for anything other than producing movies and television shows. Allowing it to be included in a commercial product (like Xanadros) is already covered well enough by item 1.

And addressing your summary, I doubt that anyone particularly cares whether any single hacker cares to support the OSD. Whether or not you choose to recognize the fact, a community has developed around the OSD. If you don't wish to play by those rules, you are free to pick up your marbles and move elsewhere with whoever you can convince to come with you. (Which is, after all, how the Debian project, and then later the OSI got going.)