If you return an item, Amazon probably cannot reasonably literally 're-stock' it as they can't be sure what you have done to it, even if it appears sealed. I would imagine the item now has to be sold at a massive discount, recycled, or simply thrown away, so to them it's probably 100% loss when you include things like shipping.

You're at fault for that - you simply decided you didn't want it after previously agreeing to purchase it - so it seems very reasonable to me to charge you for that. I think in the US they don't have to accept returns at all when you don't really have any reason (in some countries they do) so they're already doing you a favour!