So, the software is different, and possibly better (I have no way of judging). How is this an improvement over porting the software to an existing phone?

It's probably even doable to make it run on the Android kernel. See, for example, Hellaphone (https://bitbucket.org/floren/inferno/wiki/Home), which is an Inferno port to Android. Take the Nexus 4, or some other nice phone, flash it with the updates, and resell it.

Having Linux drivers for the hardware they choose is probably key rather than just reflashing existing phones.