Welcome to MobileRead reidjr, glad you found us.
While it is true that you cannot currently purchase books from Sony Connect with a Canadian credit card, many from non-US countries have acquired prepaid "gift cards" for Sony Connect and purchased books that way.
Several publishers -- SteveJordanBooks and Fictionwise come to mind quickly -- also publish some (Fictionwise) or all (SteveJordanBooks) of their books in Sony format. Many people have reported excellent success in converting MS Reader formatted books (LIT) to the Sony format of LRF.
Now the tools to do this are free and available through links in the MobileRead Wiki. The two best tools are libprs500 and Book Designer. Both are well supported by their creators and have an extensive user community here at MobileRead.
How hard is it to format books for the Sony Reader? Not very hard at all to get something easily readable. It is a bit harder to get something great depending upon your source material.
By the way, Fictionwise has over 6,000 books formatted for the Sony and all of them were created with libprs500. (Don't worry, the files will work with either the PRS-500 or the PRS-505.)
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