Tad,
I had the same problem with eReader on my PPC. The problem is that eReader doesn't recognize true VGA on WM2003SE devices. The result is the fuzzy text you see.
You can try to solve the problem with a VGA-enable hack, such as provided with Tweaks2k2. OR: I attached a file for you that you can try adding (first unzip) to your eReader program directory, it should force eReader to activate VGA.
The hack works even better if you switch back to using eReader 2.4.2 or earlier. Starting with 2.4.3, eReader includes its own DPI management, which interferes with WM2003SE. I was able to find an official package of 2.4.1 and attached it here for you. If you know where to find 2.4.2, please tell me
The bad news: Peter Fry, the main programmer for eReader PPC, left the company. This is why you don't see any major updates recently.
Of course I wonder how eReader could have won the
Pocket PC Best Product Awards as the best e-book reader if it doesn't even natively support VGA screens (uBook does and so does iSilo).