Doesn't this apply to SegWit as well?
This doesn't apply to anything and is a ignorant statement. The average confirmation time for normal transactions stays the same regardless of remaining capacity in the block. The blocks right now are rarely full and the only transactions that don't get confirmed are those that don't have a proper fee. The situation would be the same at 2 MB with occasionally full blocks.
Forgive my ignorance, but I thought a transaction was not final until it was included in a block that was accepted in the blockchain. I assumed that if there weren't any slots for the transaction, then its finalisation would be delayed.
If blocks are submitted half empty at the moment, why do we need to increase the blocksize to create more empty space/unused capacity?