The described solutions works, but I would like to mention that this works only for 1.000 songs at a time.
For example your library contains 8.500 songs, you select them all and delete them from iCloud. When you update iTunes match the next time after deletion it will still tell you that 7.500 songs are ready in your iCloud.
I think Apple has maybe implemented this due to security reasons, but for me it is confusing because if you really want to delete a big library from iCloud it takes quite a long time. Also iTunes or an Apple thread does not tell anything from this 1000 song-limitation. It took me several hours to understand this and hopefully others read this thread.
@Apple Development: I hope there will be a real "reset" option in the future for the iCloud songs, but right now you have to do it exactly
(number of your songs) divided by 1000
times to really delete everything from your icloud.
Happy deleting. :-)