Paul Arbez sez: <<I can't see how a piece of wood could add any appreciable strength.>>
Some hardwoods have tensile strengths around 2000psi. Even though chromoly steel has tensile strength orders of magnitude higher than wood's (in the 100,000psi range) there's also a LOT less than a square inch of steel in a steerer tube's cross-section, so you're only getting a fraction of the rated strength. My back-of-a-napkin calculation gives me a rough number of 15000lbs. A 7/8 inch oak dowel rates about 1500lbs, so that's an additional 10%! That's certainly plenty of additional strength, especially since it's bound enough in the steerer that it's not going to splinter easily. It also weighs and costs almost nothing.
I'm guessing that there were some early failures on these forks, or that the steerer tubes ordered didn't quite make spec. The cheapest and easiest way to add the additional 1500 or so pounds of needed strength was to stuff in a wood plug. It's a lot easier and cheaper than sending back thousands of steerer tubes for a re-do, or to draw, cut and braze thousands of steel reinforcements.
Regarding the rust issue, I liberally wax up the plug before inserting it. That both seals the steerer and keeps the rust down. Unless a plug is broken, I replace every one I remove. I say leave them plugs in!
Greg Reiche
CyclArt
Vista, CA USA