1) You explicitly don't have the right to resell the electronic copy you licensed from Amazon. Therefore you do not get to set the price at which they "buy it back" (which is not what they're doing anyway. They're refunding you for a purchase. Big difference). You could argue that you want to have the right to resell, but Amazon is free to offer whatever products under whatever terms they like. If you find those terms distasteful, don't sign up. But once you do sign up, it's your fault and not Amazon's if you get burned by those terms (unless Amazon has misrepresented the terms. Which they have not).

2) You're not being dramatic, you're being inaccurate. They were able to do this because you explicitly gave them authorization to do so when you signed up. If I give my car to a friend, and he drives it somewhere without telling me, I cannot claim the car stolen.

3) What's the incentive here? How could Amazon in any way profit by putting a bunch of illegal books online, having people buy them, and then refunding people the money for them? Best case: They break even and have a lot of bad-will amongst publishers and customers alike. Worst case, they have all that and loose money due to credit transaction fees.

4) The book is not "just gone". Amazon notified the boy to let him know that the book had been removed and his account reimbursed. You can claim inconvenience at having to spend another minute downloading a legal copy of 1984. You cannot, in good conscience, claim that minute is equal to the value of shipping you a free $10 book. Just as a baseline: A person making a $100k/year is still only netting 20¢/minute before taxes. If Amazon decided to do such a thing, it would be well beyond "the least they could do".