Wow, my initial guess as to what was the problem was off by miles and now I've been trying to make a working packaged that replaced the original reader for hours, to no avail. Beh.
Anyway, here is a new package, in which Menu->More->Settings works:
http://morkl.se/reader/readermod_v1.1.zip
And here is one that doesn't requires root, but just installs it as a regular app and removes the default app preferences (basically the same as a root package but with the modified Reader app instead of the system utilities and launchers and superuser thingamajigs and whatnot):
http://morkl.se/reader/readermod_v1.1_noroot.zip (install by connecting reader to PC, enter Data Transfer Mode, then doubleclick flash_reader.bat)
N.B. these do not replace the original Reader, as i anticipated in my previous post. Doing so seems to be a lot more tricky than I thought, since it would the require a bunch of other system apps to be replaced as well.
Coming up next: The progress I made during my lunch break today
