The only way to lower the brightness below the system settings is to use the reader menu that is displayed when you tap on a book page inside the stock B&N reader app. So tap within a page and select the brightness menu item and use the crappy, ill-effective slider bar to lower the brightness down to almost nothing if you so desire. Thanks to @Care for discovering and pointing this out.

I personaly think the terrible B&N GUI is what happens when you allow marginally literate programmers to design a reader app that sits on top of a marginally designed Android which sits on top of Linux! It is non-intuitive and it is kluge to say the least. Hopefully they will do much better and make the B&N GUI much more consistent when/if they release the updated GUI which includes Android 2.2, although it still won't be a real tablet without more buttons and some input/output ports.