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The "outrageous" part is not the (presumably very low) chance of a broken screen, but rather requiring the owner to pay for replacement. I can't imagine what, short of taking a sledgehammer to it, would cause Amazon not to replace a Kindle with a broken screen free of charge. Conversely, I can't image what evidence iRex would accept that a broken screen was not the owners fault (would even a video of the screen actually spontaneously cracking be enough - after all it could have been mishandled before the video started).
Perhaps this is an indication that iRex is charging too little for the iLiad. Business isn't my strong suite, but warranty returns should just be another predictable expense (which will obviously be higher if the device is made of glass). Trying to reduce this expense by blaming the customer, even when the customer is in the wrong, is counter productive in the end - particularly at the high end of the market.
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