They claim rights are retained by the author, but then put in that "but if you want to publish a book containing the episodes, you have to pull your stuff from Vella!" clause. So they're not stopping you from doing anything, they're just keeping you in an almost abusive relationship where, if you want to rake in the rewards, you can't have anything else going for you. Which is dumb because, if you were to sell audiobooks or physical copies through audible and Amazon, they would still get a cut. Their "this is so readers don't get confused and buy the same content twice" excuse is ridiculous, too. Plenty of people buy duplicates by mistake, even with Amazon's "you already bought this book" message. Pretty sure all you need is to go to a version with a different ISBN for it not to pop-up, anymore. And, besides, what's stopping them from simply listing the Vella version, alongside the Kindle, Audible and physical copy on the book's page, instead, to avoid this, if that's their main worry? Just make sure the pricing is roughly the same and that the web novel version isn't being sold for cheaper anywhere else and there you go.
The more I think about it, the more I realize how good this could be, but how much Amazon will, most likely, not make it so. If they incorporate it fully into KDP and make it one more available medium option, then absolutely, it'll be great. If not, then they're just looking to hold people's stories hostage with some bad terms and the promise that "you retain all rights". If that happens to be the case, I'll be keeping to my original plan of pitching to Tapas Premium and then doing an ebook and physical release (which I contacted them about and it is possible to do, if you choose a non-exclusive contract!). That seems the most viable option to get both the web and more traditional readers, while making a career out of writing.