Rescaling and in general resampling is a lot simpler. These days it's pretty inexcusable not to do it in linear space. Here's my own exploration of that problem from a couple of years back:
http://petewarden.typepad.com/searchbrowser/2008/08/why-font...
Compositing and interpolating should definitely be done in linear space though.
Nonsense. When you defocus a camera, you get an effect that's comparable with a gaussian blur performed in linear space. Blurring is a well-understood operation that's existed for a long time in the analog world, before we ever did any digital processing.
A real lens blur doesn’t look much like a gaussian blur for someone who is familiar with both and paying attention.
For explanation, see for instance http://en.wikipedia.org/wiki/Bokeh
http://www.4p8.com/eric.brasseur/gamma_dalai_lama.html