You make your points eloquently, EW, but the plain fact is that that ad-supported text has been around since the 19th C , in one form or another.Ad-supported magazines aren't going away anytime soon. The anamoly has been full-price,non-ad-supported novels , which weren't popular until well after WW2.
Ad-supported TV has been there and shows no sign of dying away, despite the decades long existence of technological means to avoid ads completely.
The freemium model for games and software is firmly established and if anything growing. I just don't see the ad-supported model going away in any of those areas-if anything, quite the contrary. People like cheap, and will be willing to put up with ads if they can get a discount.
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This is made worse in ebooks by the lack of control of the appearance of the ad. Try telling an ad exec, "it'll cost you a quarter per ebook we sell to include your ad, and you don't get to choose whether it's seen in color or not, or whether it's seen on a Kindle or a computer screen or a tablet or a phone. Make something that's equally compelling on all those devices."
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Wouldn't this also apply to games and apps? Yet there are ad-supported games and apps. I believe that you are exaggerating thhe technical difficulties of displaying ads.
Now, I'm no techno geek (I wouldn't know a style sheet if it came up and bit me in the a$$) but it seems there is one type of ad that could work in this area-the simple, clickable text ad that Google uses. It would be unobstrusive and you put them in at regular intervals in the text. You would be able to put in quite a few of them- maybe as many as one per "page" (every 250-300 words or so. You click on them and you go to the company webpage. They wouldn't take you to the company web page if you weren't connected, but then, if you saw an ad you liked while you weren't connected, you could return to it later.
THe good thing about this type ad is that it would work well across many different types of screens and even in e-ink. Now it wouldn't be a silver bullet, but there are no silver bullets.
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Who do you think will be rewriting their firmware to force the readers to see ads they don't want? How will they manage to convince book buyers that the ads won't interfere with reading, but convince advertisers they'll increase sales?
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This wouldn't work for the ad-hater, of course, so there would need to be both a full price, ad-free version and an ad-supported version, but if you use GMail, you could certainly read a novel with similar type ads without breaking out in spots.