Originally posted by Metalton:

Technically it is possible to permanently delete a game from your Steam library. [...]

Yes, the option says "remove permanently", but this is not the case.

You simply remove the game's entry from your library. The game key still is binded to your account. Repurchasing does not work because you would get the same key. You also can't remove Valheim on Steam, buy it again from a third party keyseller and redeem it on the same Steam Account.

In any case, why would you want to remove a game from your account?!