That's not completely true. At least with the GNU tools, 'rm' won't delete the root directory unless you specifically give it the '--no-preserve-root' flag. Since that flag has no use outside of deleting root, it's unlikely it has the flag on it. With that in mind the script must do some type of manual deleting for some reason.
I believe that "--preserve-root" applies only to / itself. That means `rm -rf /*` will expand to `rm -rf /bin /dev /etc /lib ...` and delete all anyway.
That's accurate. `rm -rf /* ` will still work to delete everything. But that said, `rm -rf "$STREAMROOT/"` can't ever expand to that, and more-over since the expansions in double-quotes it won't be subject to path expansion by bash. So even "/* /", which would normally expand into "/bin/ /dev/ /etc/ ..." won't. You can see what I mean yourself, just use echo:
This just happened to my coworker today. I'm sitting behind him telling him which commands to type (he's new to Linux...) when suddenly he jumps the gun and pushes enter just as I say "slash". My heart nearly stopped. I didn't even know preserve-root existed (plus I always iterate not to log in as root). It was a snapshotted vm but we still would have lost the day's work.