Well since Nate posted a video already, I'll just chime in and say that mine works pretty much the same way, except I don't think its so bad.
The clear thing about this video is that anyone who is used to a capacitive screen might have a hard time adjusting (especially when using the device for more than reading). Since I'm so used to these resistive screens, it doesn't bother me much. I felt the page turning speed was average with pretty much every Android device I've seen so far (MID size). Clearly not the show-stopper it was made to be. On the other side, the reader application itself can be troublesome, especially when trying to use the top menu that for some reason just won't come up no matter how many single-taps you perform. It seems like quite a few of the problems with the reader application are software related.
Oh, and the screen rotation you mentioned in the video is a known issue - it is actually turned off on purpose due to a bug - in the latest firmware. If you step back to 05 you can rotate the screen in the browser and the reader quite easily. I still say this is a great device for the price (especially for those of you who got great discounts at Kohl's).