This issue troubled me enough when I started using my Kindle that I phoned Amazon CS about it. They said that in the past they had the ability to delete a file remotely but never have had the ability to read or copy a file.
Piper is right about wiping files. When you plug your Kindle into a Windows PC it appears like any other storage media. You can see it in Windows Explorer, copy files to it, delete files from it and use a file destruction program to repeatedly overwrite the file. Of course, if you lose physical control of your Kindle someone else can also access the files on it.
The Kindle has a password feature that you can turn on which requires a password to access the documents on it. The screen is too small to read PDF image files but it can render PDF text files in a more or less readable form. I don't know if the password can prevent someone from getting to the files using Windows Explorer.
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