1) If you omniscient and knew exactly what had been infected then yes you could clear the computer. But you can never be sure you got everything. So we're back to the original statement that the only way to disinfect is the reinstall from scratch. If you try to just purge the infections then you can never be sure you got everything, and in my experience most people who think they did get everything are wrong.

2) That would be a neat trick for some malware to persist trough a wipe of the hard drive and clean reinstall. Is magic involved?