Oh yeah. I've done it just for fun before reimaging a machine. It will mostly complete (some stuff isn't a real file so rm just fails), and your desktop environment will remain up and running while it happen. Then errors start popping up, icons stop working, nothing loads anymore, you can't reboot or shutdown because those were actually commands, and they're missing now...
Hmm I mean Ive never done it for obvious reasons but maybe? live cds/dvds load the whole OS in RAM and could erase everything but I am not sure about the OS on disk. I could try it in a vm and see what actually happens