Black background with off-white text is not bad for nighttime reading or situations where ambient light is very low compared to the backlight intensity.
I suspect most people who buy the iPad, other than users of these fora, will have no real problems with the backlight. I don't plan to buy one right away, but if nothing better comes out this year, I'll toss my Sony Reader and get an iPad to replace it. I have absolutely no worries whatsoever about eye strain. I'd like to try one and see how it works next to a well-lit window though, as that's the only problem I can imagine the display having.
I'm much more concerned about their software than I am about their hardware.