If you ask IBM, the deal is all about the cloud. It expects to become the world's leading "hybrid cloud provider" (that is, a mix of local and outside cloud services) and will treat Red Hat as a "distinct unit" inside its Hybrid Cloud group. It also expects to use Red Hat's open source roots to its advantage -- in theory, this encourages companies to move to the cloud when they'd otherwise be wary of being locked in.
And yes, both companies are aware of the impact this will have on Linux and open source at large. The two are "committed" to open source, including contributions to the community. They also stressed that they've been working together on "enterprise-grade" Linux for the past two decades. You aren't about to see Red Hat's operating system vanish. The real question is whether Red Hat's influence on Linux and open source will grow now that it has IBM's financial backing.