Amazon watches other retailers, and price matches if your book there falls below its price on Amazon. Some people have attempted to exploit this by listing free elsewhere (through smashwords, distributing) and waiting for Amazon to spot the book free and lower the price to match.
I read at least some people have had their ebook pulled trying that though. I wouldn't exactly call it a foolproof plan.
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Perhaps you can pull it from Amazon until Smashwords starts distributing through them?
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If Smashwords starts distributing through them. We're nearly two years since smash signed an agreement, and the last mention of Amazon on their blog comes in an april fool's joke. Whatever the hangup is, it must be a doozy.