A lot of authors get by on the bits of money they get from various users of their work, and the Internet doesn't change all of that.

The Amazon programs are the way copyright is supposed to work.

This sounds like the way to go. If there is a new way to extract value from a book, then the author and the publisher should share in this income.

Books that are out of print frequently come back in print. A university press or a smaller house may bring it back, or it may come back when the author publishes a new book with a major publisher.

It certainly is a threat.

I don't think it's particularly close under copyright law. You're not allowed to copy works for commercial purposes without a license, and that's precisely what they're doing.