Android - Factory reset left root intact?

Root things (su, busybox and Superuser.apk) are installed in /system, which is usually on a special partition. This partition is usually mounted as read-only. (Remember mount command, that is neccesary to allow writing there...) It is likely that this partition is not affected by master reset.

If you want to remove root access from your phone you need to un-root it.
Here's a link for Unrooting HTC G1/Dream or Unrooting the G1 | Android Forums

The links I provided are just a starting point - I have never un-rooted so I can't speak to the method but I know that a "Factory Data Reset" / "Hard Reset" will NOT remove 'root'. I have done a "Hard Reset" though and have experienced the same thing as you - you still have root and any apps that were part of rooting and whatever custom ROM you flashed - everything else is gone. This will just clear your user-data and apps (and possibly some other things that I just don't know about) but the phone will still be rooted if you had done that before you did the "Hard Reset". As one of the links states one of the main reasons for un-rooting is for turning your phone in for warranty repairs.

Hope this helps.