I just had to register to point out that your statement about the " install-anywhere-as-many-times" blanket policy is incorrect. It's true that all of Valve's games do this and it also might be true that all the new software (not games) being added will need to follow this policy (I'm not sure). It certainly isn't true for large amounts of AAA games already on Steam though.

Developers and publishers are allowed to add any DRM they want on top of Steam, and frequently do. So you can purchase something through Steam, which can have Securom, Tages, Windows LIVE or any other DRM scheme. This includes limited machine installations which sometimes offer deactivation, but only if you specifically uninstall and deactivate them. So in your reformatting use-case, depending on what games you have purchased, you may end up in the same situation.

Basically, you incorrectly assumed Steam is an alternative to other DRM measures, when in fact it's quite often[1] used on top of other DRM schemes. If you don't believe me, simply check the store pages of most major Ubisoft[2] titles. I just picked Anno 2070 (because I know it has it) and in the infobox on the right hand side:

3rd-party DRM: Solidshield Tages SAS 3 machine activation limit

[1]Among AAA titles that is, I have yet to see it in any indie titles. [2]Pretty much the worst player in the industry when it comes to DRM.