What you say only applies to sorting n unique/distinct keys. With no prohibition on duplicate keys, n & w vary quite independently. In this more general setting, radix sorting is indeed "really" O(nw) and w could be like 8 bits for some giant data set (EDIT and order is absolutely a useful property even with dups since there can be satellite data with the keys - also possibly bounded!). This is a common talking past each other problem in this area. To your credit you made this assumption explicit. (EDIT: "General purpose" may have some semantic unclarity, I suppose.)
In terms of relevance, everyone has their own, but my personal experience is that most (but not all) real world data allow both duplicate keys and bounding key width. In particular, the largest n data sets have been the least likely to have a prohibition on duplicate keys, and also the most likely to have small w (with a few exceptions). The random access pattern of memory writes in the passes of a radix sort may (or may not) be a problem, and constant factors matter, of course (as you also say). So tying w to n was has always seems a very special and somewhat artificial case to me.
I also have never heard of any practical O(n) comparison sort for fixed w before. Can you perhaps give a reference to some such algorithm? Thanks!
If you fix w to a constant, then certainly one can claim that radix sort is O(n), but then so are comparison sorts as well.
That's not to say that radix sort isn't useful in practice, just because two sorting algorithms have the same asymptotic bounds doesn't mean they are equal, but it is to say that its performance is a matter of evaluating the constants rather than how it scales.