Try a factory reset, then turning on airplane mode *without* registering the device, then flashing the official 5.3.1 update.
That *should* revert the wallpapers to stock.
*However*, the Paperwhite has an explicit command that can download new wallpapers OTA (much like the SO ads), so if the Waterstone wallpapers come back after you enable Wifi, then you'll know that Amazon is actively pushing them to your device. I which case I agree with jswinden - that is definitely crossing a line and is unacceptable, and if I were you I would complain to Amazon and ask them to remove those ads... or just return the device.
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