This bug was initially created as a copy of Bug #1710346

I am copying this bug because: 

AIUI yum doesn't exhibit this problem, but the bug exists in rpm 4.11 nevertheless and the dnf tech-preview (or something like that) in RHEL-7 extras is expected to be affected. Because dnf is not the default in RHEL-7, the priority is lower than in RHEL-8.

Description of problem:

When updating packages with dnf, if install of the newer package fails the package gets entirely removed as the cleanup stage runs despite the failure.

Version-Release number of selected component (if applicable):
All versions of rpm up to 4.14.2

How reproducible:
Always

Steps to Reproduce:
1. mount an iso image on /mnt
2. update/downgrade filesystem package

Actual results:
filesystem package gets removed completely

Expected results:
filesystem package stays in the original version

Additional info:
Here's a replay of it on Fedora, but equally applicable to RHEL and should be reproducable with just %pre scriptlet failure as well.

[root@sopuli ~]# rpm -q filesystem
filesystem-3.9-2.fc29.x86_64
[root@sopuli ~]# mount -o loop ~pmatilai/iso/Fedora-Server-dvd-x86_64-28-1.1.iso /mnt/
mount: /mnt: WARNING: device write-protected, mounted read-only.
[root@sopuli ~]# dnf -y -q update filesystem-3.10-1.fc30.x86_64.rpm 
Error unpacking rpm package filesystem-3.10-1.fc30.x86_64
Error: Transaction failed
[root@sopuli ~]# rpm -q filesystem
package filesystem is not installed
[root@sopuli ~]#

The reason for this is somewhat unexpected (but legitimate) API use by dnf, so it cannot be reproduced by rpm itself. The bug is certainly in rpm though.