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I think the latest version of the iPod can hook up to a bluetooth keyboard, and I think there are bluetooth keyboards that fold up for transport. The iPod can certainly also display e-books of various flavors, so I wonder if some combination like that might more closely approach your reading / writing needs than a Kindle?
Which, despite its many fine (in my opinion) qualities does not, alas, allow word processing. I love its ability to annotate and search, but I must admit its keyboard does not strike me as suitable to enter large amounts of text.
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