I asked a couple unofficial sources about it. The Seattle PI article is pretty accurate.
It was one of the business people (not a programmer) in France trying to get certain things not to show up on the French "home page" (like the Digital Camera store shows up on the US home page.) They probably have to be "family friendly" in some way too. He probably didn't realize that what he did to "fix" what he saw as a problem on his site was wrong, and would ripple across the world. The reason that the main search was affected is that the search process takes the "adult" flag as just another data input, like the ISBN, author, title, etc. Several people, in Seattle and elsewhere, spent the holiday weekend on-call working on this high severity ticket, trying to figure out what happened.
It really was human error, and I expect that someone got a reaming when he got back from his holiday.
Generally, Amazon's PR types are a little slow to respond, and Amazon never likes to reveal the internals of how it does stuff. It is fairly complex to start with, and even when I tried to get a handle on it from a system flow perspective I got a headache and a data buffer overflow error from my brain.
No policy involved, just someone (maybe more than one for the earlier items) with too much access to muck around with things doing just that without double checking.
However, it is very likely that the long term fix will be a change in how easy it is to mark stuff "adult", and how blithely the search functions take such data as given. Maybe, if we're lucky, they will implement a "safe" search ala Google, so that people who don't want the real world to intrude can have the fun stuff filtered out. But that's just my suggestion.
Amazon has built its reputation on what is called the "long tail" - the stuff that your average bookstore, even a big one like B&N, doesn't stock. That's why they have third party sellers, and used books. They want to help you get what you're looking for, what you can't pick up at the corner store or some brick and mortar chain. That includes GLBT books, Sex and Disability books, Art books, and various sex toys all of which you can't just walk out and buy in small town America, or even big city America. Sometimes their catalog people and buyers are a bit thick (like classifying yarn as "thread" - definitely a non-native English speaker did that one), but they actually try to have the hard to find stuff.
They are not another WalMart. They generally treat their people far, far better than WalMart.