A quick (and I think minor, relative to the thrust of your post) factual correction: Amazon’s current publishing services do have an editorial component.
A second aside: I would like to thank you for teaching me a new word. Yes, that’s right. I’m man enough to admit it.
Now then, most of your vision of the Amazon future is correct (or at least, correct if Amazon gets their way), but there are a couple points I have to take issue with. First, paper books are not going away. At least not any time soon, and by that I mean, as I said above, that none of us will live to see it*. Fun fact of which you may not be aware: Amazon publishes paper books. So “you can not lend books any more, period” is just not in the cards, any way you slice it, at any point in the foreseeable future.
But even that is a pretty minor point. The obvious real fear is that your beloved (;)) Nazi Carebear Slashfic or whatever will cease to be available. I’m sorry, but I just don’t see that coming to pass. Let’s take the extreme case: your vision of the future shockingly includes Barnes & Noble, and I’m willing to even cut them out of the loop. Traditional publishers are dead. All current ebook retailers not named Amazon are dead. Apple is dead, so don’t look for help there. Amazon is the one remaining mainstream publisher and accounts for, I don’t know, ninety percent of the total publishing going on in the world.
So what? Nazi Carebear Slashfic is already a niche genre, as are Gothic Vampire Bromance and Alternate Geology Biography. If Amazon doesn’t want to publish these things, other people will, because in no future timeline does Amazon own all the printing presses and internets. And if Amazon decides to lock down the Kindle to only work with their own content, that sucks, but these niche audiences will still be served, because in no future timeline does Amazon produce all of the e-readers, phones, tablets, computers, magical scrolls, and malicious audiobook-reading AIs in the world. The worst that’ll happen is that these guys will suffer for lack of a popular distribution channel… but ask the author of If the Grand Canyon Were in Brazil: the Life and Loves of Chancellor Sour Sam how many airports his book is in right now if you think that’ll be anything new.
*This is assuming that you’re talking from the perspective of someone who is concerned about where this might go and how it might affect their own life. If you are worried on principle on the behalf of future generations, I have this to say to you: do not be. You have your own problems, and besides, it’s very unlikely that our society will make the switch to all ebooks, all the time before Ragnarok happens anyway.