I finally got accepted to place a pre-order, and one option to "add" is the OS on the SD card preloaded. Is this needed, or can I download the OS elsewhere? Could I just put on my own version of Linux instead?
You will need an SD Card with a Pi compatible operating system on it. Several options are available from the official Raspberry Pi downloads.
You may not need to buy one. Assuming you already have a compatible 4GB or larger SD Card and reader/writer you can create your own and save a few dollars. Directions for creating your own card can be found in How do I install an OS image onto an SD card?.