Within an isogenic population, even in the same extracellular environment, individual cells can exhibit various phenotypic states. The exact role of stochastic gene-state switching regulating the transition among these phenotypic states in a single cell is not fully understood, especially in the presence of positive feedback. Recent high-precision single-cell measurements showed that, at least in bacteria, switching in gene states is slow relative to the typical rates of active transcription and translation. Hence using the lac operon as an archetype, in such a region of operon-state switching, we present a fluctuating-rate model for this classical gene regulation module, incorporating the more realistic operon-state switching mechanism that was recently elucidated. We found that the positive feedback mechanism induces bistability (referred to as deterministic bistability), and that the parameter range for its occurrence is significantly broadened by stochastic operon-state switching. We further show that in the absence of positive feedback, operon-state switching must be extremely slow to trigger bistability by itself. However, in the presence of positive feedback, which stabilizes the induced state, the relatively slow operon-state switching kinetics within the physiological region are sufficient to stabilize the uninduced state, together generating a broadened parameter region of bistability (referred to as stochastic bistability). We illustrate the opposite phenotype-transition rate dependence upon the operon-state switching rates in the two types of bistability, with the aid of a recently proposed rate formula for fluctuating-rate models. The rate formula also predicts a maximal transition rate in the intermediate region of operon-state switching, which is validated by numerical simulations in our model. Overall, our findings suggest a biological function of transcriptional variations among genetically identical cells, for the emergence of bistability and transition between phenotypic states.