sponge buffers the whole input before writing the output. Its utility would be in reading from a file, working on it with other tools, and writing the result back to the original file, all in one line.
By the way, I think you’d be in even more trouble if you wrote:
cat /dev/zero > ased -i 's/root/toor/;/joey/d' /etc/passwd
But I get your point.