Thanks to jhowell and DiapDealer for your comments on advantages of kix other than shoring up the walled garden which may have influenced Amazon's decision to go this way.
In post #60 DiapDealer wrote:
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If it were truly that simple to incorporate the enhanced typography features in such a way that all devices/apps (which supported enhanced typography) would display them similarly via KF8, it would have been done that way I believe.
What you're describing is handling it the same way as epub does. Meaning that the same file will render differently (from subtle to drastic) in every app and on every device.
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I had not thought this through adequately nor sufficiently understood the technical advantages of kfx, but clearly this does fit in very neatly with Amazon's customer-driven philosophy. In fact, given the variety of Amazon devices and applications and its obsessiveness with customer satisfaction, having a single format able to deliver a near uniform and optimal reader experience over all devices and applications is an explanation in itself. As I understand DiapDealer's above comments, an epub like implementation in kf8 would not have the desired result of a similar rendering on all devices. Instead, to achieve this would require a separate customised kf8 file for each device, a far less satisfactory solution.
This also fits in nearly with jhowell''s comment in post #67 as to the use of only azk on the IOS app.
In post #67, jhowell also wrote:
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To my knowledge Amazon hasn't shared their reasons for developing KFX. My speculation is that the primary reason was a desire to have a common rendering engine that they had full control over and that could be used in all Kindle apps and devices.
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So yes, as I now understand the situation, the features themselves could have been implemented in kf8, but not in a manner that could easily render in a similar fashion in all of Amazon's devices and apps. Perhaps the idea came from azk on IOS. Or possibly azk was a precursor or proof of concept.
In this light I also see no real reason for Amazon to seek to withdraw kf8 files or further lock-down kfx. In fact, the development of kfx would have been a good opportunity to strengthen its drm if it was of a mind to. To my admittedly less than expert view, it seems that Amazon could have made things a great deal more difficult than they in fact did if this was their aim. Certainly they did not make it easy, but the impression I get is that they were fairly indifferent to whether the format was reverse-engineered or the drm circumvented. It is even possible that Amazon does not entirely disapprove of this development. Given the noncompetitive nature of the other major ebook vendors, Amazon logically benefits to some unknown extent from selling ebooks to their customers which some can read only by removing drm and converting to epub. Even if this number is relatively small Amazon seems to have little incentive to lose them.
I'm trying to think what Amazon stands to really gain by going kfx only at this stage, particularly in light of its customer focus, and I'm not coming up with anything compelling in the foreseeable future.