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So, I'm a Kindle owner and an iPad owner. I prefer the Kindle for leisure reading. For work stuff I use the iPad for the reasons you list (highlighting, etc.). Specifically, look for an iPad app called iAnnotate. It even has one more feature you didn't ask for, that I think is great. Once you annotate an entire PDF, you can have a summary emailed to yourself. This gives you just the text you highlighted and any notes you took.
On the other hand, if I was you I would call $500 plus too pricey. At least it was for me when I was a college student. So, I think we have several years ahead before we see iPad like capabilities on eInk or pixelQi for under two hundred dollars.
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