Good catch! My personal suggestion would be to just remove the negation from the two tests instead of changing the operator (from || to &&), but either option would work.
And looking briefly into that extension I wonder why there is an empty '/etc' directory in the root of the squashFS when it's existence is also been ensured via the startup script. Looks a bit like a "belts & braces" approach to me, but clearly no harm will come from this redundancy.