1) For e-ink, your choices are basically Kindle, Nook, Sony, Pocketbook, and maybe a few other niche devices. Kindle 3 and certain of the latest Sony models have the new Pearl e-Ink screen, which is the latest commercially available technology.
2) a VPN IP proxy is your friend. As for bookstore shopping and availability from Canada, I did a really long post in response to another Canadian who recently asked, and things haven't changed, so I'll just link it here instead of copypasting:
Canadian grad student choice.
As for specific books that are available in the US and not in Canada, I recall some of the Elizabeth Peters mysteries in particular, and I've seen some other stuff when browsing freebie offers. But what seems to happen more and more often is that books will be available at one price from the US publisher, but a second price from the Canadian publisher.
For example, when you go looking for say, Stieg Larsson's books at Amazon via a link to the US version, you'll get a "This book is not available in Canada" notice, but if you look underneath to "other formats", there should be a link to another Kindle edition from Doubleday Canada or whoever publishes it up here.
3) For library books, an ADE-DRM ePub supporting reader is required, unless you're both comfortable with and willing to learn how to strip DRM and convert (not yet illegal in Canada, despite the best efforts of our current Conservative government; be sure to write your MP to oppose Bill C-32 if you'd like to keep it this way).
That lets the Kindle out, unless you're prepared to do the hoop-jumping. By the way, BC is ranked in the top 10 for library e-book # on MR, and our selection seems to be pretty good.
But I've noticed an increase in unavailability and longer hold wait times since the holidays, when I guess a lot of other people got new e-readers. I hope they learn to set short loan periods and also the trick of returning books early soon (right-click on the little button beside the book in ADE, choose "Return Borrowed Item").
4) Sony's supposed to have 10 built-in multilingual dictionaries; I think Pocketbook's supposed to allow you to add your own dictionaries which you can build yourself from free online dictionary files (but I'm not really familiar with them, so this might not be the case); and I definitely know that the Kindle accepts external dictionaries in a suitable format which you can make yourself and set it as the default for word-lookup when you read.
I've used a free English-French dictionary here on MR (it's somewhere in the Francophone forum) on my Kindle and it popped up French "translations" when I moved the cursor over included words in the English text I was reading.
Finally, I get plenty of free books from B&N with no problems. And I don't even have a Nook.
Hope this helps, and welcome to MobileRead!