I think stock availability and backorders both doesn't work in an expected manner.
I added a new product and setup the stock fields like this: http://img155.imageshack.us/img155/9524/stock1.jpg
Product page looks like this: http://img402.imageshack.us/img402/7253/stock2e.jpg
I still don't see any message saying stock not available or out of stock instead of that it says "In stock"
Nothing with the back-orders also, I don't see any message saying - Backorder
In-fact I am still able to order 1000 quantity.