Maybe instead of playing devils advocate, you could spend some time learning not to assume.
I hardly think the password "protects" me, because if I type in the password and continue, then the result is the same. However, since I have been doing this for awhile, I have trained myself to look again when the password prompt appears.
I suppose there are two competing definition of mistake at play. Allow me to clarify.
(1) The act of doing something incorrectly
(2) The result of doing something incorrectly
I fully admit I can make mistakes in the first sense, in fact it is expected. Maybe I mistype a path (this can be helped by using auto complete), or maybe I used the wrong option, etc. This happens all the time.
This is why I double check my work before I execute, sudo or no sudo.
Now, mistakes of type 2 are a result of me executing the command from mistake type 1. You are correct to point out that in user land, rm -rf ~/* would indeed be possible and would not prompt for a password. This is why you double check.
However, the chances of rendering your system unusable in this situation is unlikely. That is why user land is segregated from the system components.
Contrast this with executing something in system land. If I run sudo rm -rf /, well, I think you know the result. You will render the system unusable, this is the very reason permissions are defined the way they are, thus requiring sudo.
The password prompt gives you an extra opportunity to make sure your command is correct.
So, to close, in no way did I imply that the requirement of a password somehow makes me think I won't make mistakes, at least in the second sense of mistake. Nor did I imply that the "password protects me" as it quite obviously does not. It does however, make me check my work again.
Don't make assumptions.