Perhaps the USBnet drops are related to the touchscreen drops. Perhaps those are both symptoms of a bigger problem. Sometimes touchscreen activity returns on its own (or rather, it worked all along, and the DISPLAY is delayed). I did notice while typing a search command that the keypresses seemed to be ignored (i.e. touchscreen not working), then suddenly after about 20 seconds all of those "missing" kepresses squirted into the search bar. They were just stuck in a buffer for awhile...
Strange that factory reset and firmware update did not fix this problem, unless (as
knc1 suggested) it could be a voltage regulator (or other hardware components) out of spec.
I suppose it makes sense that the touchscreen and usbnet problems could well be related, in which case it might suck to have a lockup while flashing a new u-boot, eh? If that happened, I would need to learn to boot an image from serial (or wherever), if I could figure out how to set the boot-mode pins on the SoC...
EDIT: A third (probably) related symptom: this PW3 had a dead LiPo battery with an inflated foil pouch, a symptom typical of severe overcharging (to death). The reason this could be related to USBnet and touchscreen dropouts (and USB state changes causing touchscreen dropouts) is that in the kindles, battery charging is under firmware control, and firmware is highly dependent on hardware reliability. That means the current battery borrowed from the PW2 may now be at risk as well. I hope it does not catch fire inside the PW3 (especially while in my pocket). Though more energy-dense (higher power-to-weight ratio) than other lithium battery technologies, LiPo batteries can be dangerous (as seen in LiPo-laden flaming "hoverboards").