Actually, I find the manually broken lines only mildly annoying myself: I'd rather the weren't so, but whatever.
Clearly they're important for some reason, because it takes extra trouble to do.
@bowerbird: re: PDFs -- I agree with you on how the ease of generation has affected/sponsored PDF ubiquity, it's been kind of a building cycle. Incidentally, you should check out Hadrien's Feedbooks site, it generates PDF files on the fly in just the way you're describing, in several preset sizes, plus a customizable one. I think he uses LaTex on the backside ....
I also agree that PDF is one of the best conceived formats extant and marvelous for its designed purpose. That purpose just isn't all that well suited for e-books so its performance there is mediocre, requiring the specific formatting you refer to in order to really work well.
But with DE and epub, we have a situation where Adobe's acumen/ruthlessness is now getting behind a format that is much better suited for e-booksn and a number of e-book sellers and e-reading devices have expressly announced plans to support it. All of which could be very exciting indeed.
If we get a situation where a standard e-reading emerges then suddenly all e-books and all e-readers can be inter-compatible, and we can then focus on getting that standard format refined instead of spening a lot of effort trying to get a standard in the first place.
Mayhaps I dream, but it's a pleasant dream.