I posted a (DRM-free) PDF online. A friend of mine wants to read it on an iPhone. (I've never even touched one personally.) The PDF has both a Table of Contents in the form of "PDF Bookmarks", and a internally-hyperlinked table of contents one one of the first pages. My friend reports that neither seems to be useable or accessible in whatever PDF viewing software he was using (no doubt the default one--accessed through Safari, it would seem), making navigating the document very tricky.

Is this normal behavior for the iPhone's PDF viewing plugin? (If so, that's really disappointing.) Would Stanza or any other free viewing software do the trick?

Any information would be greatly appreciated.

Is this normal behavior for the iPhone's PDF viewing plugin? (If so, that's really disappointing.) Would Stanza or any other free viewing software do the trick?
The default PDF viewer isn't exactly feature-rich. I'm not familiar with any other PDF viewing software, but I do believe the nicer ones are paid apps.

Stanza cannot read PDF files. It will only read eReader and ePUB. Perhaps what you can try is to convert the PDF files using Calibre (http://calibre.kovidgoyal.net). I'm not sure how well that would work, though. PDF isn't exactly the best souce format to use. If you have an alternate format for the file (e.g. MS Word, HTML, etc), you might try converting from that.

Their website is misleading then. Their list of supported format makes it seem as if it should be able to read PDF files:
http://www.lexcycle.com/supported-formats

I did see mention of a PDF reader called "Good Reader" which does support these things, but no, it's not free.

I actually already made HTML and ePub versions of the same book, but it's nowhere near the same quality as the PDF. (The book in question is full of mathematics, and it looks a lot better when made with (pdf)LaTeX -- out of curiosity, I tried converting the PDF to ePub in calibre and the result was an unreadable mess.)

Their website is misleading then. Their list of supported format makes it seem as if it should be able to read PDF files:
http://www.lexcycle.com/supported-formats

Stanza Desktop supports PDF files and converts them to ePUB for consumption on the iPhone. Unfortunately, if you thought Calibre's ePUB output is an unreadable mess, the resulting ePUB generated by Stanza Desktop would probably be even worse.

I posted a (DRM-free) PDF online. A friend of mine wants to read it on an iPhone. (I've never even touched one personally.) The PDF has both a Table of Contents in the form of "PDF Bookmarks", and a internally-hyperlinked table of contents one one of the first pages. My friend reports that neither seems to be useable or accessible in whatever PDF viewing software he was using (no doubt the default one--accessed through Safari, it would seem), making navigating the document very tricky.

Is this normal behavior for the iPhone's PDF viewing plugin? (If so, that's really disappointing.) Would Stanza or any other free viewing software do the trick?

Any information would be greatly appreciated.

Try the Good Reader app. Its current version supports PDF bookmarks, the next version supports hyperlinks.