Sure, it can read PDFs. You'll encounter problems in two main cases:
1) PDFs designed for a large paper size, such as A4 or US-letter. These will be scaled down to fit the device screen and the text size will then be quite small, and often unreadable.
2) PDFs with large images (in filesize), the Cybook will probably not have enough memory to handle these, and will show blank pages. These files will also more easily crash the device.
That said, if a PDF is mostly text and designed for a small pagesize, it will be quite readable. You can find such PDFs here in the forum, on in Feedbooks... The Cybook even comes with some pre-loaded PDFs.
Anyway, ProfJulie is right, it does not support re-flowing or font changing. In this regard a PDF page is just like an image.
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