BIG-IP : under what conditions does LB_SELECTED event fire ?

Yes, LB_SELECTED should be triggered when a load balancing decision is made regardless of what triggers the decision. This happens even if you manually specific a pool or node in an iRule:

 iRule
when HTTP_REQUEST {
    node 10.128.10.252
    log local0. "selected [LB::server]"
}
when LB_SELECTED {
    log local0. "here"
}

 /var/log/ltm output:
: selected 10.128.10.252 0
: here