Basically a PDF displays on a Kobo but is not able to be read. At full size, the print is tiny and zooming in and panning line by line with a 5 second delay would have my ereader thrown against the wall by page 3. Maybe there is a PDF out there somewhere that is the right size but I have yet to find one. A fail for the Kobo in my book.
You can convert PDFs and I have tried. Usually the line length is set which gives you a one word line every second line. An ereader is about a superior reading performance. so still a fail. I read PDFs on a netbook.
Bottom line - if the Kobo can't get this fixed, they are misleading customers by calling it PDF capable.
While I am in this mood, a few more disappointments are the limited battery life ( two weeks?), of sometimes 2 days. And a dead battery shows up by locking the display AND losing the place 400 pages in to a book - with no way other than page turns to get back to your place. A firmware upgrade is supposed to solve these issues but I have been on their Early Access program for a month now and no word at all.
A Kobo reads epubs fine which is why I have not taken mine back. Fair to say though, after spending NZ$300, I am not thrilled with my purchase.