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It won't kill dedicated e-readers.
I do think it will shrink the market for the expensive, large screen e-ink devices though--and that's what the OP mentioned with the $500+ price.
The main reason for those large screen readers is for A4 PFDs, text books etc. And I just can't see many paying the high price for those if they can get a tablet to read those on for $500 and do a ton of other stuff. For most people, they're not going to read that kind of stuff for hours on end like they do novels.
Now some will still buy the large readers for sure, including those here who prefer reading even novels on say a Kindle DX vs. a smaller screen.
But I'd say tablets killed the chance of large screen e-ink devices really taking off.
Smaller 5" and 6" readers I think will stay around as there's a sizable niche of avid readers who want e-ink or some other reflective screen.
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