Re: Do the publisher contracts permit this?
"Surely Amazon can't unilaterally decide to pay a page at a time unless the contracts have some sort of language about selling parts of books."
These are self-published books, Amazon *is* the publisher. I'm sure they made sure their own contract permits changing the payment terms.
"Suppose someone self-publishes a book, 1000 people buy the Kindle version but no one reads it. Then five years later the writer becomes well known, and everyone who bought those 1000 copies suddenly reads all of it. Would Amazon pay the writer at that point?"
No they wouldn't be paid in 5 years, they would be paid at time of purchase for the whole book. People who pay the monthly fee for "all you can read" never purchase the book, so I would assume they could put the book on their device now, flip through the whole book 5 years from now and the author would be paid for them flipping through the whole book.
"This is going to be a bitch for people writing technical manuals/reference books/textbooks. Does anyone read every single page of the computing books they buy?"
Anyone buying a book, they will buy the book and the technical manual author will get the same as before. This is just for this "all you can read" service, and self-publish through Amazon.