It's a glitch, but more a reoccurring glitch in the system rather than a temporary glitch currently assigned to just these "old gen" games. Best to take advantage of them when/if you can.
It has been going on too long for this.
As you point out, previous spikes were short lived, which means the system has checks to prevent it from going out of control/flagging stuff for human review. This has been going on for over a week and it is also only happening on older systems, not PS2 and newer systems. You are also assuming that the system is only for amazon's own selling efforts and not doesn't involve 3rd parties using amazon. I think Gamestop is behind this. All the games jumping up in values are from systems that GS doesn't carry anymore (gamecube stuff is/all but phased out at GS nowadays). Nothing crazy is going on with current gen games.
They've said they want to start a vintage game divisionhttp://www.theverge....p-vintage-store
And while it might seem crazy for GS to use a competitor's trade in service, keep this in mind. Vintage games are unproven and, at best, will be a minor sideline business for GS, so it is unlikely they would choose to muck up their systems for the main business to handle vintage game trade ins.
If you were to start a vintage game retailer, how would you get the merch to start off?
1) You could hiring a staff to deal with 1000s of ebay auctions over some not short period of time .
2) You could hire a bunch of people and spend a lot of money building infrastructure for some sort of amazon like mail in trade in business for a yet to be proven new business.
3) or you could just use amazon's trade in system to get enough inventory to get the ball rolling enough to get the business off the ground. Once they have enough inventory/the business seems like it might work, they'll probably set up their own trade in by mail service.
While there have been some odd ball pricing (MTV music Generator for the PS1), most of the high values are on games/series with known demand (Mario games, JRPGs, star wars) based on either nostalgia or actual rarity (cubivore).
As to how this can work economically, I suspect that GS will do VGA lite grading system to appeal to collectors...so for all those disk only Silent Hill 1 they getting for $21 of amazon credit, GS will grade it and repackage them and sell it for $40 and for the black label complete Silent Hill they get for $30, they'll put in a sealed graded package and sell for $80.
Now this is all a guess on my part, but for these trade values to be this high on a relatively selective batch of games for this long is unlikely to be from some unplanned effort.