With the new royalty system, you do indeed get 70% of Amazon's listed price, less a nominal delivery fee of $.15 a megabyte. But with some restrictions.Hope this is helpful.
1. You can't price your book lower than 2.99 or higher than 9.99.
2. It must be priced at least 20% lower than the lowest print price.
3. It must be priced no higher than the price you charge for any other digital version on any other site.
4. Amazon may decide to offer it at a discount, at their discretion. If they do, you get 70% of that amount.
5. If your prices lower anywhere else, you'll need to adjust your Kindle edition prices accordingly.
Or you can opt for the 35% royalty and not worry about any of that.
I've tried to pin down whether you can still offer your work for free and still sell it through Amazon's program, and have found no hard data. However, J. A. Konrath, an author publicly known for selling through Amazon (just signed an exclusive deal with them) offers all his books for free at his site, so I'd assume it's permitted. I'm going to write him and see if I can find out.