Lenovo are testing the water with one device rather than going all in.

Exactly! I just might buy this one to give Linux a slight boost.

I’m really interested in how a different OEM handles SteamOS. Will the OS be locked down right from Valve? Or will Valve allow some OEM bloat (MyAsus) to be running on the device?

There is one issue where I want Valve to become a bit flexible; easy installation of 3rd party launchers. I know it’s against their interests to do so (even though the community has come up with alternatives and thankfully Valve is not stopping them). However, majority of people get confused and state that it’s not possible to play Epic/GoG games. Maybe Valve will take a small hit in sales because of this but Linux gaming will improve in the long run.

The report also mentions that the larger model does not feature the Steam button, implying that SteamOS will be exclusive to the Legion Go S model in the new series

IMO, this is a logical move and not a “We ❤ Linux” moment. Lenovo probably saw that Windows was performing abysmally on the lower powered device and it would offer a horrible experience to the users. But I would consider this a small win since this is the first time a big player has officially embraced Linux. This device would be perfect for playing indies and retro gaming and I hope shows people how easy Linux gaming has become.