I haven't manage to read all the way through this thread, so pardon if I am repeating what someone else said ....
I've been reading the posts which seem to reflect on timing and specific behavior and results, and I wonder if we're not seeing a bubble pattern.
With Prime Lending, people could only borrow one book a month, so it probably didn't make as much difference to the audience, even though it made a big difference to some authors. However, now with KU (which I believe allows lots more borrowing) we're seeing the customers who are into deals leap in -- making a new-adoption bubble. (Kind of like what happened a couple years ago with free books and new Kindle users.)
But here's the thing -- the "irrational exhuberence" of those customers is likely aimed at the most expensive books they can find. If traditionally published best sellers (which are overpriced) are in KU, those are the books people are going to go for, even though they did the opposite with Select. The psychology is different.
It's different partly because the customers with Select had already paid their fee, and it was "oh look, a new benefit for Prime." With KU, it's bargain hunters who paid their money up front, and want their money's worth.
I suspect Indie customers were already getting their money's worth. Select gave other people incentive to try the occasional new author. KU does the opposite.
If I'm right, this might be a bubble. Once the first instinctive grabbing wears off, people will settle down into regular reading patterns, just like they did after the first crazy free and 99 cent book bubble. However, I have no idea whether the regular pattern will be good or bad for authors, or for indies.