The Linux kernel is not the entire environment.
The set of GNU licensed tools and applications is not the entire environment.
Gnu + Linux is not the entire environment.
Those who care are aware of the distinction between "Linux" the kernel and "Linux" the environment built upon a Linux kernel. Those who don't are unlikely to be aware of the derivation or importance of either term. Of those who care few are willing to use his terminology.
This is not what I would consider a "misconception."
In my opinion Stallman does his cause damage by tilting at this particular windmill.