That doesn't mean he can't charge for it though. It just means he can't stop (via copyright law) someone else doing exactly the same thing and not giving him a cut.

Amazon aren't taking action on this so of thing because it is legally wrong (because it isn't) or because it is morally wrong (that argument could go on for some time and isn't relevant anyway so I'll not start it by expressing my opinion either way!).

They are cracking down on that sort of thing because it is irritating their userbase, and they think that the damage done by having the content there is much more significant then any cut of purchasing fees they would take. Taking more selective action (i.e. not dropping the few works where significant effort to nicely format the content for Kindle like devices, while getting rid of the great many hasty "copy, paste, done" jobs) would likely be far too much hassle too, relative any possible benefit (i.e. cut of the proceeds, and the less tangible "library completeness").

Irrelevant, though. Sure, there may be no copyright preventing anyone else from ripping off his reformatting work, but that doesn't prevent him from charging for it. He just has to endure the risk that he may not get for it what he charges for it when somebody else rips it off and sells it for $0. This is analogous to selling a nice, commercially pressed DVD of a linux distro for $5. You have no protection against the next guy giving an equivalent item away for free, but there is no law preventing you from charging money either.

Except since the cost of production for individual units is $0, it's more akin to crafting a really nice distro, not a DVD.

The software community is set up so that there is social compensation for open source labour. To a certain extent, the community of authors is the same way. The publishing community is certainly not set up so people are used to recogizing publishers for their contributions.

"Recognizing" To wit: with money

And some in the past tried charging for the result (rather than charging for support instead or as well, as RedHat and their ilk do).

It didn't work of course, but due to user education [the sort of people looking for Linux know they are likely to be able to get the same thing or better for free (plus media/transmission costs where relevant) elsewhere] rather than because it is wrong legally speaking, copyright or otherwise.