First of all the GPL has been tested in court. Twice. In the USA it was [link|http://www.oreillynet.com/pub/wlg/1168|found] to not cause an immediate enough issue to be grounds for a preliminary judgement. That is, there was not demonstrably material enough harm in allowing that specific violation to persist that the potential violation had to be stopped while the case was still being argued. (This does not indicate that the GPL would not prevail, merely that damage from an ongoing violation was repairable later.) In Germany last year both [link|http://www.a42.com/node/view/157|a preliminary injunction] and [link|http://www.oii.ox.ac.uk/resources/feedback/OIIFB_GPL2_20040903.pdf|a final judgement] were decided in favour of the GPL.
We're still awaiting a final judgement in the USA on a GPL violation. I suspect that we'll have one before the decade is out, and I'm confident that it will be in favour of the GPL. If the GPL was weak, then why would a series of corporate lawyers over the last decade have come face to face with it and then blinked?
As for defining what distribution is, that is not the job of the GPL. Let's get into the same bind without involving the GPL at all. Suppose that you (some random company) beg and plead for my Super-Duper-Data-Massager. And after being paid I let you have and use it (but grant you no other rights). What are you allowed to do with it? Well under copyright law you're not allowed to distribute it. What does that mean? You'll have to consult a lawyer.
You see, I never gave you the right to distribute my code. Under copyright law and precedent there are various things that you can do which look kind of like distribution but legally aren't. Copyright law gives me no right to complain about those. There are other things you can do that look similar to the first set but which are distribution under copyright. Copyright law gives me the right to sue you about those.
That fuzzy line is also the line of when the GPL will be triggered. As you see, it is a matter of copyright law, not a matter of contract between you and me. The GPL gives you a limited grant of permissions that copyright law does not. The GPL is not, and should not be, in the business of explaining copyright law to you.
About whether Jake is right or wrong, a real lawyer might disagree, but my understanding (IANAL and all that, even though I've talked with lawyers about it) is that the GPL is a very solid license because it does so little. And my understanding of the GPL directly contradicts Jake. As does that FAQ. Furthermore in the absence of precedent, ambiguities in licenses tend to be cleared up in favour of the interpretation of those who wrote them, in which case the stated opinion of the FSF in that FAQ carries considerable weight about what the GPL should be understood to mean.
Cheers,
Ben