We run Kestrel directly facing the internet serving http2 traffic across billions of requests per day with no issue. No need for Nginx.

Which Linux distro are you going with? Any recommendations for/against distributions.

We deploy our apps as containers on top of the standard dotnet images: https://hub.docker.com/_/microsoft-dotnet-core-aspnet/

The default uses debian but they have ubuntu and alpine variants too. We stick with the defaults and don't have any preference for distro.

I am using nginx as a reverse proxy to kestrel in production on one of my projects and it seems to be working great so far

Yeah I do the same, lets me do seamless deploys. I spin up the new version, change the nginx config, then tear down the old one.

This setup is also what Google Cloud is using for their App Engine.

Yes, this is what we use. So far it seems alright, and we did some load testing last week.