One reason to study "linear algebra" is because it is a "special case" of module theory (the case where the ring $R$ is commutative with unity, and the group of units is all the non-zero elements). So it provides a number of possible illustrations of any given concept that applies to modules. Of course, some of linear algebra doesn't generalize to $R$-modules, but it can serve as a starting point to get a grip on what is going on.
"Free" structures are an example of a categorical construction. For many kinds of structures, we have a set with certain other structural features added to it. It is possible to just "forget" the additional structure, and consider the morphisms between two like structures as just ordinary functions. This yields a FUNCTOR (called a "forgetful functor"), which is basically a "category homomorphism" from some category to the category Set.
Free objects are this process in "reverse" (sort of). We start with a structureless something (like a set we want to embed in a group in a natural way, or a group we want to turn into an algebra in a natural way), and want to create a "more structured structure" out of it.
For example, suppose we start with a set with just one element in it:
$S = \{x\}$.
If we want to make an abelian group out of it, we'll need to define $x+x$, for example. So we just "invent" a new element $y = x+x$. Now we have:
$S' = \{x,y\}$.
Of course, we need to also create new elements:
$x+x+x$
$x+x+x+x$, etc., so we just add those in, too.
We need an identity, so we add that in, as well:
$T = \{0,x,x+x,x+x+x,...\}$.
Finally, we need inverses for all these, so we have to enlarge our set to include those, too:
$T' = \{\dots,-x+(-x)+(-x),(-x)+(-x),-x,0,x,x+x,x+x+x,\dots\}$.
Now, all we need is associativity, so we just declare it holds (since we haven't really said what $x+x+x$ is, we just state that:
$x+x+x = (x+x)+x = x+(x+x)$, and so on for any other "3 terms").
If you were paying attention, and you will agree to abbreviate:
$nx = x + x + \cdots + x$ (n times)
you might notice that our abelian group is isomorphic to $(\Bbb Z, +)$.
In other words, we might have DEFINED integers as "elements of the free abelian group generated by one object" (which, if you think about it, is kind of what we do when doing accounting, say with: $x$ = "a penny"). This construction is CATEGORICAL, which means we can use integers to keep track of any kind of set element (apples, dollars, salaries, trucks...if someone asks you: "what is a negative truck?", you can reply: "clearly, the additive inverse of a truck!" :P).
As far as bilinear forms go, why stop with 2? There is a rich theory of multi-linear forms, leading to some very satisfying results.