This kind of fork would of course mean death to the Linux desktop, since the only reason the Linux desktop is relevant and (somewhat) modern is because it's enjoying the improvements that are made to Linux by companies who primarily use it on servers.
If this fork happens, this VM-based distro is what enterprises will switch to and build upon, with conventional Linux being relegated to niche use-cases with much less activity and manpower.
There are already VM/container-focused distributions (Alpine etc). There is no real ecosystem fork and likely never will be.
Most desktop Linux users don't need NVIDIA even a little, because AMD's GPUs will serve them just fine. They're not doing AI.
Or at least we hope Nvidia wouldn't be left as the only vendor of modern GPUs in that case. That would be very unfortunate.
And willingness of others to follow. NVIDIA needs Linux to sell their HW. For Linux NVIDIA isn’t even 1% of their market.
INAL.
I'm not sure Nvidia needs Linux 6.6+. If this change is indeed a dealbreaker, they can very well fork it at the last working version and offer it in combination with their own distro.
This kind of bullshit pettiness will end up making the situation worse for desktop Linux users and consumers, while enterprises reliant on Nvidia equipment in Linux-based server systems will just jump to Nvidia's fork and distro.