Peter,
JLinked absolutely creates a 'standard' Joomla user underneath. We simply then have some functionality that says LinkedIn user 'bob' is really Joomla 'bob' and then log 'bob' into Joomla whenever they use the Login with LinkedIn button.
Adding some functionality to auto-generate an email address would actually be pretty simple. It would take a few little code changes here and there, but most of that functionality is already part of our JFBConnect extension, so it'd be easy to implement similarly in JLinked. The reason it's in JFBConnect and not JLinked currently is because LinkedIn doesn't provide a way to access a user's email address. If you don't want that, then it's pretty easy to auto-generate a username, make up an email address, and then pull in the rest of the user's profile as necessary (Full name, etc).
If interested, we can help you with what you're looking for. If you wanted to let the user fill out a registration form (including their email address so you could capture it), that functionality is already built into JLinked. After registration, they'd simply click the Login with LinkedIn button from them on to login using their LinkedIn credentials and never be aware there is an underlying Joomla user.
Hope that helps,
Alex