Amanzon can't "demand" access to your Kindle, that's the whole point about not getting too nervous about their ToS.
Don't buy eBooks from Amazon, don't turn on Whispernet, and Amazon will never ever know one lousy bit about your reading habits or what you store on your Kindle. It's really that simple.
Still want to upgrade firmware? Download onto your PC, connect Kindle via USB.
Still want to buy eBooks from Amazon? Load them to Kindle for PC (or Mac), rip them, upload them via USB to your Kindle.
Amazon doesn't upload any of your eBooks to their servers ("all your eBooks are belong to us"). There isn't a horde of underpaid members from the outer party who browse through all your files to report any wrongdoing.
This isn't 1984, after all ...