I'm pretty sure that cloning a repository of that size can't be all that fun.

You tend to split repositories based on team responsibilities. I doubt that every developer needs access to update all million+ files.

What this comes down to is that they've made certain architecture decisions that ideally would be changed but it's not possible to do so at this time.

I agree. Users are always right, even for open source software. Requiring the users to change their way is an easy way to lose them. A major player like Facebook willing to use Git is a good thing, as it may help spread the software in companies like Facebook. Git should try its best to please its user, rather than the other way round.

Git submodules make it really easy to split up large projects into smaller components.

Also, as Ævar writes in the first response, "there's only so much you can do about stat-ing 1.3 million files".