howdy anthonyi
I'm not using Fedora but I suppose we all have seen i386-packages - regardless of the distro. As I personally "live by" the compiler I have never asked myself this question, as nearly all software packages that I use get custom-built anyway.
But as a quickshot, I'd just say the
i386-compilations are the most common denominators, in other words: the "size that probably fits (almost) all machines" regardless of SSE, SSE2, 3dNow, HyperThreading and what-not-else.
You are quite right, when you think that you can gain quite some performance by using packages that are compiled with some sturdy optimizations (I still can remember my jawbone going down, watching a P3/400 under KDE after a Gentoo stage-1 installation with heavy optimization that took 3 days but performed mindbogglingly well).
Despite that: higher optimization also means reduced compatibility. So it would not make much sense to install a i686-compiled package when you want to run the content on a i386-based machine. That's what source packages are for in Linux.
Moreover: profiling an average machine would show something like this ...
wasted runtime ...
=> due to non-optimized code: 0.00003141592%
=> waiting on some friggin user-input: 99.99996858408%
As you can see: As long as we humans take our sweet time, the vast majority of the users will be quite happy even with i386-compiled packages - and the speed-hungry? Well, those just grab the src-archive and GCC 3.4, crank up the "-O" parameter and have lift-off a couple of days later

have a nice day
ps: and if you are now asking yourself "but then why is blackpage compiling every package?" - well: because I'm a geeky nerd, what did you think?

// edited as typing capabilities have gone temporarily berserk
[Edited by blackpage on 2004-09-09 15:33:54]