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.