Just a short demonstration that shows the advantages and disadvantages of steam. Steam is a great tool, but it has its place and limitations. Check it out. Fit it into your arsenal.
So devil's advocate here... I know you say the rubbery caulking is "wrong", but it looks like it has held up prior to steaming. Is it still ok for a quick fix for one sash while on a ladder?
The fact that I had to use steam to get the glass out is evidence enough that it’s not right for this application. Second evidence is how rotten the sash was. Yes it had adhesive properties, but it also created water traps that accelerated the sash’s deterioration. Ignorance has its consequences. Yes you can use it, and it’s easy to make arguments when you don’t have to deal with the fallout, passing the consequences onto the next unsuspecting schmuck.
No groove on the top sash so the glazing compound can shed the water to the outside. The top sash, being tucked behind the top sash has a groove because the wood in the meeting rail takes its place. The break between the sashes keeps the water from bridging across to the bottom meeting rail, and it’s important that the meeting rails make contact across the breadth. Tucking up inside the groove creates another near impossible obstacle for the water to get over to get to the inside.