Steam doesn't need to lock down the Steam Machine to subsidize it with store purchases. The casual user could theoretically install another OS, but that doesn't matter because they won't (because they're casual users), and the dedicated user buys most of their games on Steam anyways because it's the dominant distribution platform.

The risk isn't that casual users all spontaneously decide to stop using Steam on their own. The risk is that businesses exploit the subsidy in various ways. For example, businesses could buy the Steam Machine in bulk as a workstation. Or a store competitor could produce an OS of their own that replaces SteamOS and promote it to users.

>and the dedicated user buys most of their games on Steam anyways because it's the dominant distribution platform.

It's also the most convenient by far, and the new Steam Family stuff lets you share all of your games with all of your siblings without any need for password sharing like you'd have to on e.g. GoG or Epic. I have 4 siblings and most of us are married. Our combined Steam library is well over 1000 games

They do need to lock it down if they want to subside it with store purchases, otherwise it's too tempting for non-gaming uses where they don't get any money after the initial sale.