Couldn't people move over to another app store like F-Droid?
Most app available on Amazon's app store are already available via Google Play Store anyways. Rather, most developers have deserted the Amazon's store and the versions available there are outdated by years. I noted that Apps Amazon released for their own external or internal events like AWS re:Invent were only available via Google's Play Store and not Amazon's own.
The challenge is that many apps on Amazon's app store are tied to the app store. I once tried disabling Amazon's app store app, and noted that the apps installed stopped working (until the app store was enabled again). My immediate conclusion was that I would not want to rely on these apps or Amazon's app store. The developers may not have any incentive to update their apps versions on Amazon's store to remove the dependence on the latter, and nor they may have any to allow the paid users just install those apps from Google's play store without paying afresh.
I do see potential for a closed source repo managed like an app store, but adding a repo for every app adds unnecessary security risks (as the app specific repo can contain any number of apps).
Could you speak more to your security concerns about adding repos? To the very best of my knowledge it doesn't auto-download from all the repos, that would be crazy, and it for sure doesn't auto-install from them
Nothing gets auto downloaded, but all of the sudden you need to be very wary of what apps you download from what repos, and that kind of threat fatigue will lead to infections for even the most diligent users.
That's not to say I think the concept of adding repos is bad, the unfortunate truth is just that adding repos comes with a bunch of implications that many users are likely to be unprepared for. It downgrades F-Droid from "a project with centralized management that tries its best to remove malicious apps" to "downloading APK files from random websites (now with auto update)".