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Originally Posted by Who are you?
It's not cleared up by that quoted bit of text. It only states that Amazon can view what you have on your kindle, not remove it. The illegal part is not relevant either, because the kindle users aren't the ones doing something illegal, it's Amazon (if indeed they had no license to sell the Ayn Rand novels).
The relevant part of the terms of service is this:
Nowhere in the license agreement / terms of service does Amazon give itself the right to alter or remove digital content from the Kindle, only to update the device software and view/know what digital content you have on the device and how you use it.
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Thanks for making this more clear...(better usage of the root word 'clear'?)