My Android phone is rooted. I've always rooted my phone and/or unlocked the bootloader, even though I usually stick to the stock OS. I root for a number of reasons:
* mounting and chrooting into a full linux installation
* using VPNs (not needed since Android introduced VPN support)
* using Titanium Backup Root (ideal when you upgrade, you can backup and restore apps and all their configs and data)
* removing or disabling bloat
* using tools which can block apps with too many permissions (not so necessary with newest Android versions)
* using ADB over wifi
* use tcpdump to analyse traffic and see if any apps are misbehaving
The first point is the relevant one here. I partition my SD card so that the first partition is used by Android (FAT32), then there's a second EXT4 partition for linux, then a third which is a small swap partition. I installed a fairly minimal debian desktop into that second partition. I could use a disk image file and loopback mount it I guess, but performance might suffer because of the encryption. You can install Debian or Ubuntu Arm linux into a disk image on an x86 PC because debootstrap works just fine.
To use it, I fire up a regular terminal in Android, or get a shell over ADB/USB or ADB/Wifi, and can fsck and mount the SD card partition. I have a few scripts in /data/local/bin to do this, they also mount/bind the emulated and real sdcards into that linux environment. Then I chroot into it, and have a few scripts ready to set up the environment.
Mostly I use the command line, so I can rsync photos off the phone onto my file server, and rsync music onto the phone. I can start an ssh daemon so I can ssh into the phone, or push music from the file server using the rsync command.
If I really really want to use a graphical program, I can start vncserver with a virtual frame buffer, and then run the GUI program in linux on that, and then in Android use VNC Viewer to give me the linux experience; I can also VNC into that from a PC as well of course.
I'm not saying that this is what Planet will do, but if you have root on your phone, plus a busybox which has a large number of the standard command line tools built in, and a linux installation you can chroot into, it's a pretty powerful environment