LSB as in least significant bit? Sure you can install debian packages on
Ubuntu and Red Hat packages on Fedora, but there are still some limits to
this and you can't install Red Hat packages on Ubuntu and vice versa. If your
game would be big enough to need a DVD, it would mean using two DVDs instead
of one if you want to provide an installer for the .rpm croud AND the .deb
croud. And I'm not even mentioning the rest.
That's why the generic installer approach sounds the best to me, but I'm
afraid it would not work out equally well on all platforms. Have you heard
about any program that used that approach and didn't show compatibility
issues?
Funding is of course very important, I wonder how free software games would
do side by side with proprietary games on the shelf. People treat proprietary
games almost as free software anyway. Copying and downloading illegal copies
is extremely common, so it seems one might just permit it without significant
impact on sales. Only way to more or less effectively protect the game from
being copied is to tie it to some online service like Steam. And only a small
percentage of all games are like that and the developers still make a living.