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I would say it is definitely possible to write a stand-alone PDF viewer for the Kindle. It all depends on what Amazon is willing to do with the framework and SDK. If they are not crippled in any way, it would be just a matter of time before developers are able to write a better PDF viewer (and other applications too).
My opinion is that the existence of the SDK is a great step forward. That means that is only a matter of time before add-ons can be written, including a better PDF reader.
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