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I'm no lawyer, and I'm sure that you know more about these things than I do, but it seems to me that if you buy a Kindle, and accept those terms of service, you are agreeing (via that first part of the agreement that I quoted) not to reverse engineer or modify it. You're right, that's not against the law as such, but contracts can certainly "trump" things that would otherwise have been legal. Eg, it's not illegal to do more than 5000 miles a year in a car, but if you lease a car, and part of your lease agreement is that you won't exceed 5000 miles a year, you can most assuredly be required to make additional payment as a consequence, and taken to court if you refuse to do so.
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