How is Amazon supposed to know that the author is the copyright owner? As far as I can see, when they asked about the book being on the web and for him to confirm that he had publishing rights, all he told them was that it was under a free license. I suspect that Amazon is, quite reasonably, interpreting this response as meaning that he is NOT the author, and just has the publishing rights granted by that free license.
If he is indeed the author, his response should have been: "I am the author of this work and the sole copyright owner. It is available on several web sites because I have made it available under a free license".
For example, if you received your book content from a source that allows you and others to re-distribute it, and the content is freely available on the web, we will not accept it for sale on the Kindle store.
We will not accept content that is freely available on the web unless you are the copyright owner of that content.
Since the author is the copyright owner, there is nothing in the guidelines that suggest the handbook is explicitly prohibited - Wikipedia pages could possibly be accepted, if the Wikimedia Foundation submitted them.
I think "Megan B." might be confused by the facts that Mr. Phillips is the editor of the content (as opposed to being its sole author) and by the mention of the FDL. I also think that she is using the term "exclusive publishing rights" to mean copyright ownership.