It's an approximation of how many Muslims there are in the world, making the generous but not entirely incorrect assumption that they will be familiar enough with Arabic to at least be able to tell if you've completely borked your rendering.
I'm completely ignorant of Muslim culture but there was a time where Catholics recited prayers and liturgy in latin and plenty of practitioners recited the sounds without really understanding them.
Source: my grand aunts saying "arapreme" where "ora pro nobis" would go (the former kinda sounds like an Italian word). Also probably related, "hocus pocus" is the "magic" expression "hoc est corpus" ("this is the body [of Christ]").
Learning how to read and pronounce arabic properly is part of the religion. As all prayers etc are in Arabic and you are supposed to recite them in arabic not a translation and wrong pronunciation can change the meaning so they are strict about teaching proper pronunciation. Though I agree with you about the 2 billion number being incorrect but it was being used a turn of phrase not an accurate number.
Not everywhere. I live in an islamic region (around 40%). Religious quotes in every other home, but maybe 2-3% of people know at least some arabic letters, not to mention words. You learn it only if you learn at madrasah or are hardcore muslim (not as in extremism, but as in taking it seriously). After you learn it, you have to listen to popular interpreters, because Quran is still hard to get right on your own.
I grew up in a Muslim environment and I know al fatiha and more. But I don't understand a single word of it or can't tell if what I recited is a word or a whole sentece. I believe 99% of the population in my country are the same. Also we can't read Arabic script.
In my surroundings I would say roughly 90% of people reciting al fatiha do so based on sounds learnt by heart, they would hardly be able to explain the meaning of these individual sounds.
The only assumption is that Muslims may, on average, be able to "read the Arabic alphabet to some degree". Obviously 'some degree' makes it very variable, does not imply being able to really read/write/speak.
I don't know if it's true but that does not seem unreasonable.
My point is that what seems reasonable to someone that doesn't know anything about the subject means nothing, and could even end up being somewhat offensive.
Try to reverse the logic and realize how absurd it would look to you: say a guy in middle east wanted to roughly estimate the number of Latin speakers and made the assumption that it should roughly be the same as Catholics.
Wikipedia says there's ~2 billion muslims, and 400 millions Arabic-dialect speakers (native and non native). So on average 20% of muslims are able to understand basic arabic, I expect that not even half of those would be able to read and understand classical Arabic such as written in Quran.
if all catholics were taught the bible in latin, you could make the assumption (true or false but reasonable) that all catholics would be able to read latin to some degree.
Coran is traditionnaly taught in arabic even in non arab countries. Also I have no idea how these country can read or decipher arabic in general, I can guess where these number come from
Funny enough there are many Muslims who can read Arabic but have almost no idea what they are reading as they don't speak it. The Quran is interpreted into many languages but prayer is read in Arabic no matter what their native language is. Reading the Quran is also preferrably done in Arabic, as translation is open to the interpretation of the translator, so the only truly immutable word is read in Arabic.
Interpretation of Arabic itself is the least problem they have. It takes a well-educated interpreter to make correct sense out of most statements.
With few exceptions, Islamic revelations do not state which Quranic verses or hadith have been abrogated, and Muslim exegetes and jurists have disagreed over which and how many hadith and verses of the Quran are recognized as abrogated,[6][7] with estimates varying from less than ten to over 500.[8][9]
