In the businessworld, this is pretty much standard practice, especially in the marketing and promotions arena. You promise somebody something, you get something in return, and you work together to get everybody's stuff selling. In fact, most artists work this way (it's called building a community).
But in the book world, which used to be a gentlemen's business, with no "dirty dealing" of this type, this could potentially piss off a bunch of people (the article has a few choice quotes from one agent in particular). It's only funny, though, because blurbs basically work the same way already - you just don't go on record and say it. I mean, when somebody offers to do a blurb, could they say "oh, I hated the book" and not do it? Sure. But most people won't. They write blurbs for friends and colleagues, even if the book sucks.
I'm sure if an author said, "This book is awful.", Amazon would just say "OK. Thanks for trying." and then not promote the author's book. (You can't expect something in return if you don't give anything.) That's the way business works. So what if you get a kickback for your hard work?
Is this devaluing the art of book reviews? Yes and no, because these reviews are essentially biased but then again, all reviews are. They're biased by the publication they're publishing in, the audience they're trying to reach, or sometimes even for political or, whoops, business reasons. Amazon's way is just being more open about it. (All reviews are also impacted by a single person's taste - the reviewer's. So that's another inherent bias.)
I, frankly, think it's just another way to get an author's stuff out there. And if they have to say something nice about another person's book? I mean, unless it's crap, it's not really that hard to find something you like about it. As someone who does book reviews, trust me, I know.
And more sad news from Amazon Affiliates, though: they've ended California's Amazon Affiliates program due to a change in online retail laws that force them to collect taxes. So, Amazon ends their program (one of the most lucrative for bloggers like me) to thousands of people. I mean, I understand that the government wants their money, but do they not realize that by shutting down places like Amazon, they're actually shutting down taxable income to their state? Amazon does the I-99 forms, so California is still getting taxes paid on that income - just not sales tax.
So, let's find some happiness, shall we? Here's the best books from Amazon for 2011 (so far).