Steps:
1. Create StreamingAssets folder in Assets folder
2. Drag any GameObject from the scene inside this folder
==>
GameObject became Prefab Instance with missing asset (since the prefab is not imported)

Some thoughts:
It could make sense to create a prefab in the streaming assets folder you just can't connect to it.

So:
Drag'n'drop should allow it but not connect, maybe show a dialog
PrefabUtility.SaveAsPrefabAsset is ok
PrefabUtility.SaveAsPrefabAssetAndConnect should throw an exception

SavePrefab_Internal should bail out if the path is a streaming asset folder and connectToInstance is true