Here's a newbie question: is the other software or add-ons which can expand the functionality of this reader? If so, can someone suggest a good source?

yes... buy a 505 :P

The 700 is only now hitting the street, so I'd give it a bit of time before it gets hacked.

For what it's worth, the UI of the 700 is considerably better, than that of earlier models, so there is less of an immediate need to hack it.

And the speed of that UI is so much improved over the 500 that it's incredible. The Alphabetical listing down the side of the library screen makes it so easy to get to the book you want, even with well over 1000 titles on the 700.