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The marketplace on eBay and many pawn shops have lots of locked devices (iPhones, Kindles, etc.) - if you purchase a used Kindle, find out it's locked and listed as lost/stolen, reach out to Amazon to see how to get it back to the original owner, and Amazon won't provide a means to do that, then there's not much you can do. If a partially crippled device does what you need, you might as well keep it out of the landfill and use it.
Keep in mind, "blacklisting" is for lost or stolen, as reported by the original owner - so they could have lost their luggage, left it in a cab, whatever - then just reported it as lost to Amazon and it got locked. I've never heard of Amazon locking down a broken device, but that doesn't mean they don't do it. Either way, doesn't really matter - once blacklisted, only Amazon can lift that, and if it was blacklisted due to being lost or stolen, short of being contacted by the original registered owner that they have found their device, it's going to stay that way.
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