the hardware doesn't do anything a cheap Dell rackmount Linux box with sshd, two network cards and some firewall rules can't do for about $8000 less.
I don't know what model Cisco equipment he's dealing with, but I don't think that your statement's strictly true.
First, I am unaware of NICs for PCs that support WAN interfaces like T1/E1, PRI, DS3, Sonet, etc. If they do exist, I can't imagine that the Linux support is all that great.
Second, his Cisco might have been a combination switch and router. I'd like to see you get 144 ethernet ports in a Linux box.
Third, there are a lot of features available on dedicated networking equipment that don't work as easily or well on non-dedicated equipment. 802.1Q VLAN tagging comes to mind, but I'm sure that there are a variety of others.
If you just want to connect two ethernet networks together, then, yeah, it doesn't make a lot of sense to pay gobs of money for a dedicated router, but many people have more needs than a Linux box with a couple of NICs in it can deal with.