There is no reason that you cannot use this code with this license in a larger BSD work. It is “compatible” in that sense.

This specific code has additional restrictions (not charging). That does not add any restrictions to the rest of the code though.

So, if you are charging, you are in violation of the license just for this code snippet. Linus Torvalds, the copyright holder, could try to enforce the license against you. Since he gives it away, no financial damages. Which means the remedy would be that you would not be able to use this code anymore (but could still use the rest of BSD).

I do not expect Linus to pursue enforcement on this one.

It would be a very difficult case to win anyway as you would have to prove that people were being charged specifically for the Linus code and not for other code covered by BSD (which allows charging).

I would argue that this license has not even been violated, unless somebody has put a price tag on this specific code.

Then again -- and IANAL -- the license is worded so vaguely that I doubt any of it is enforcible. "You may not distibute this for a fee" -- what is "this"? Is it the entire kernel or does it apply to small excerpts of it? Because apparently "small partial excerpts may be copied without bothering with copyrights". But do you mean copyright attribution or are you rescinding your copyright entirely if I only copy "small partial excerpts"? But what is a small partial excerpt? And so on and so forth...