The sr0 is a representation of a "cdrom", ie static ISO image. When you update something related to cloud-init, the ISO will not be "edited". It needs to be completely re-generated. There is a "regenerate" button in UI that can force that. However it doesnt mean the ISO will be remounted live to a running VM. Besides that, the cloud-init ISO is only read on boot and some portions are only executed once on initial boot of the VM.
Blockbridge : Ultra low latency all-NVME shared storage for Proxmox - https://www.blockbridge.com/proxmox