I think she never really said that Amazon remotely wiped her Kindle. It was more like "I cannot redownload my books because Amazon closed my account and I cannot access any local copies because my Kindle is broken". And after some rounds of chinese whisper through the "blogosphere" the part about the broken Kindle got lost.
If I correctly remember the last reported case of a closed account, Amazon refused to do any more business with the person concerned (=selling him stuff) but he kept access to his account and his already bought and paid digital goods: apps, mp3 files and ebooks.
The current case seems to be a string of botched CS actions to me: No real communication with the customer and total account lock.