I think the problem is that when people refer to 'anime', they refer to a school of animation that the West simply isn't nurturing, Avatar notwithstanding.
The reason I like watching anime is because it provides shows and films that combine mature storytelling, somewhat more realistic animation and proportions, and a general willingness to be more experimental. People in the West became familiar with anime through the likes of Akira, Ghost In The Shell, Cowboy Bebop and Neon Genesis. Sure, those shows and films are not symptomatic of all anime, and I would never suggest otherwise. But they are examples of the sort of territory that Japanese animators are willing to cover, and for many people that constitutes a big part of what anime is. I'm currently working my way through Noir, having already demolished my way through Black Lagoon, Gankutsuou, Kaiba and Kemonozume. Even though those shows are all drastically different in presentation and style, they still exhibit the same wish to be taken seriously as mature narratives, not simple throwaway rubbish.
In the West, animation still falls into two firm camps: kid's stuff and comedy stuff. While kid's animation occasionally throws up some gold, like Avatar or Batman TAS, for the most part its all pretty inconsequential and doesn't offer all that much to chew on. The comedy stuff, on the other hand, may be targeted at adults, but it's all animated in an incredibly barebones, basic way, and focuses more on cheap laughs than any kind of narrative that may appeal to mature audiences. We've let western animation become defined by the likes of Family Guy, the Simpsons and South Park: entertaining, sure, but cheaply presented and focused on throwaway gags.
If I wanted to watch a Western animation that was actually aimed at adult audiences looking for a good story, the only thing that springs to mind is the HBO adaption of Spawn, and that came out in the frikkin' Nineties. We've allowed animation to become cheap, inconsequential light entertainment, and I think that's where many people see the divide. For all that the Japanese animation industry is going through massive changes, it still provides us with stuff like Paprika and Redline.
If Western animation was to up its game and to start catering for that same demographic looking for something a little more from their shows, then we'd probably see less hostility to the idea of conflating the terms. As it is, if animation is a medium rather than a genre, then it's almost as if the Japanese are the only ones providing us with westerns, science fiction, film-noir, mystery stories, etc, while Western animation is purely focused on comedies and kid's entertainment. When one side of the industry is so willing to ignore the vast number of genres that exist out there, and the hunger for stuff other than cheap entertainment, then you can't be surprised when fans put up a fence around the other side that does recognise that demand and caters for it.
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