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I'm not sure about the story, it may well be true.
However, one thing I am sure of. The customer service rep's knowledge/helpfulness varies from phone call to phone call.
I would have called back a couple of times at least to get differing info. This is what the Kindle page on Amazon says
have your entire library with you.
"Automatic Library Backup: Download Your Books Anytime for Free
A copy of every book you purchased from the Kindle Store is backed up online at Amazon.com in case you ever need to download it again. You can wirelessly re-download books for free any time. This allows you to make room for new titles on your Kindle, knowing that Amazon is storing your personal library of Kindle books. We even back up your last page read and annotations, so you'll never lose those, either. Think of it as a bookshelf in your attic--even though you don't see it, you know your books are there"
Nowhere does it say there is a limit to the times you can download.
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