Yes, it reads scanned books in pdf. I had problems with Google scanned books at certain zooms (at least in older firmware). My guess is that it run out of memory for page to be displayed.
Maybe that rescaling to lover picture resolution would help, but I always managed to find acceptable zoom that M92 was able to show and was still pleasant to read...
The only disadvantage of scanned pdf is that flipping pages is slower (but acceptable), you cannot lookup words in dictionary (there is no way to input the word in this case) and of course you cannot search doc for text or choose and export notes.
But scribling with the pen works fine and you may create a new pdf with scribles included.
Also in the latest firmware there is still beta-version of a new pdf reader, which has also modes for comics reading and scientific 2 collumn doc reading.