I think you're discounting the state of GNU in 1991 by quite a bit. It's probably true that the bulk of the "effort" was spend on the toolchain (because, well, toolchain), but almost all of the GNU userspace (bash, coreutils, make, flex/bison, etc...) was present and working at that time. It was routine on the proprietary Unix boxes I was working with for someone to have built all the GNU stuff and left it in /usr/gnu/bin for use. Frankly the userspace stuff was already better in many ways (c.f. all the feature/bloat flames, "cat has arguments", etc...) than the proprietary equivalents already.

When Linux arrived, it was booting to a working free userspace within months. The FSF had, from their perspective, the right plan. They certainly weren't just a compiler.