Right. The "completely different HTML rendering engine" is actually called "Webkit-based Mozilla5.0 mobile browser".
And a large page is a large page regardless of the rendering software. Kindle 2 can't support large pages because it would take up too much of its RAM. The browser software is only responsible for
displaying the web page.
The audio player doesn't need a buffer between the flash and the CPU: it needs a buffer between the CPU and the speakers. When the CPU is dealing with rendering a very large web page, it doesn't have the processing power to prepare audio for the speakers
and continue to render the web page at maximum speed. It deals with this by processing the audio first, storing a second or two worth of audio in a buffer, and then playing it through the speakers. This way, when it's rendering a complicated web page, it can play the audio from its buffer and catch up on the audio processing that it had to put aside to deal with the web page when it's not as busy. It's like the Nintendo DS's dedicated VRAM: the Nintendo DS can obviously read from its ROM cartridge fast enough to create an image on its screens. It needs dedicated VRAM so that it has some backup video in case it has to deal with aspects of gameplay that require all of its "attention".
You might be right, though. It could be that Amazon didn't have any good reason to put in double the RAM and just acted foolishly. They should have asked you first.