You are correct, Amazon will NOT go for a giveaway deal from indie authors. (They do have an email address for when you have problems, and I know that they are at least somewhat responsive to problems - but I don't know about questions. I tend to use their author forums in the DTP programs when I have a question.)
Also, Smashwords already has their Kindle hook up running, but it gives you no advantages. It used to be that you could offer a book for free on Amazon for free by offering it for free on Smashwords, and then signing up for distribution on Amazon. But I've heard that Amazon simply puts a price on those free books or doesn't offer them at all any more. (I haven't been able to confirm this, however.)
Most of us offer free books one of two ways (both using Smashwords). One is to offer the book for free on Smashwords for a while, and promote it. Don't release it on Kindle until you've raised your prices. If you do this, and you use any of the premium catalog partners, though, you won't be able to offer your book on Kindle until the partners get their catalogs updated. This is fine for Apple, but it could take months for Barnes and Noble to get it right.
The other method we use is to simply offer the book on Smashwords, the partners and Kindle at the same list price - and offer coupon specials for free books on Smashwords. Smashwords ROCKS with their coupon feature. That's how a lot of the ebook reviewers get their review copies these days - you create a free coupon and sent them the code. (Some don't accept that, but most do. Those that don't accept it will often accept a doc file.)
Oh, more good stuff! Camille, you're the greatest help. I'll investigate getting to Amazon via the Writers' Cafe. So far I've posted someplace on their system about the "no access" problem. Really, as long as their staff make the sorts of mistakes I found on the Amazon listings and nobody catches them, they cannot be trusted to publish my books. The big houses have access, but I can't get Penguin to demand corrections. Arrgh!
I.J. I've got a couple of short story anthologies in the works in our little company in San Antonio, Backwater Publishing. We're going first with electronic and have decided to go with Smashword. I don't know how many titles you are looking at, but they do have a publishers rate if it's over one. I'll keep you informed on how easy this is when we get into actual production.