How is it a bug in their algorithm? If anything it's a bug in their process. OP found a niche category with so little competition that it was simple to legitimately become the best-selling author by virtue of having the best-selling book (over some time period) in that category?
I agree with him that the title is meaningless, but it's not necessarily inaccurate. What Amazon needs to do - that is, if they care about the 'validity' of the best-seller title - is better vet submissions and purchases. One person purchasing multiple copies should probably only count as one purchase for the sake of this distinction, although that might hurt small retailers that buy from Amazon directly.
I see this as not much different than claiming you're a World Record Holder because you stacked the most pennies on your big toe (it was 21, for the record).