Aha
Okay, first of all I want to point something out to all the people saying it can't be energybending just because it's not exactly like what Aang did. Aang only performed one energybending move and not all forms of bending are exactly the same. Remember Toph?(bitches, you better remember Toph!) She was still earthbending despite not earthbending the way others did. Hers was a self taught style and not reflective of the standard. It was still very effective(I dare say, more so in most cases).
Now, on to the energybending theories. They aren't paralyzed. That would have been mentioned, especially by authorities within the series, because it raises Amon's threat level to not just benders, but everyone. And he'd definitely know if he was paralyzing people. A guy like that doesn't go on stage in front of all those people he's trying it impress and raise all that pomp about his abilities, without thoroughly testing those abilities in private first.
My theory is that he is redirecting the energy flow away from the chakra points found in the forehead and the crown, which are tied in with spiritual development. Spiritual connection, whether the bender is good with spirituality or not, is still heavily tied to the bending, since it's portrayed as a connection to your guardian spirit. Remember, when the Moon Spirit was killed, waterbenders lost their power, so that spiritual connection
is necessary.
So, simply put, he's closing off the pathways to or redirecting their energy away from their spiritual chakra. Thus cutting them off from their connection to their elemental spirit.
That's reasonable.
But look at this: Energybending is not like Earthbending; it is VERY VERY rare (in fact, only seen once on TV, twice if you count Amon), therefore we can't say there are many styles or forms. And the only difference Toph made was that a) she dove deeper in Earthbending: Listening and waiting for the right move and b) she taught herself, with the help of badgermoles.
If they weren't paralyzed, Zolt should have been able to move when he tried to firebend Amon. He tried to, then he fell down. As what I have said, you need to provide or produce locomotive stances in order for you to bend. You can't bend with your mind.
When the Moon Spirit was killed, yes, the Waterbenders lost their waterbending. But as what Iroh has mentioned, EVERYONE else will be affected.
So yeah, I'll put your theory up.